Is This It? Bitcoin Tanks, Skeptics Celebrate
"The crypto craze is morphing into a crypto crash, from Bitcoin mania to Bitcoin bust," wrote Mike O'Rourke, chief market strategist at JonesTrading, in a note published early this morning. The problem with bubbles bursting, explains O'Rourke, is "that there is no level at which value players step in." Instead, a bounce comes only when technical sellers wear themselves out.
Of course, many crypto investors will say that kind of volatility is not unusual for bitcoin—and that history suggests a bounce could be coming soon. Last year, "no pullback retraced more than 61.8% of the prior move, and each subsequent rally made a new high," wrote Instinet technical analyst Frank Cappelleri in his morning note.
Perhaps the recent shakeout will just scare away the weak, thinning out the newcomers who rushed onto the Coinbase bandwagon.
Already, we're seeing some of the hype fade. Long Blockchain (LBCC), formerly known as Long Island Iced Tea, has more than halved in price to about $4 after its “blockchain” makeover took it sky high. Some of the hype is being controlled. The Reality Shares Nasdaq NexGen Economy ETF (BLCN), a blockchain-related stock ETF, launched today, but not under its originally filed name. The Securities and Exchange Commission reportedly asked Reality Shares to remove the word "blockchain" from its name. It is down about 0.7% so far today.
In the long run, this could be healthy for bitcoin. For now, there's pain to work through.
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