Ohhhh, now that's a crypto crash!
We finally get to see some real volatility
I was going to talk more inflation stuff today but recent moves in the cryptocurrency space are too spicy to pass up.
A few weeks ago, there were a bunch of headlines and articles about the recent cryptocurrency “crash” at that time. Looking at Bitcoin, which went from a high of $64,899 on April 13th to $47,044 on April 24th for a 27.5% drop, it’s easy to say that was “bad.”
But, come on, this is crypto. Things get crazy. That’s not a real crash. And, I said at the time, “Let me be clear - there is still a lot of room for cryptocurrency to fall. It’s not a real crash until Bitcoin is down 50-80%.”
Now, I said that simply because, Bitcoin fell over 90% from its high in 2011, and over 80% from its high by 2015, and over 80% from peak again in 2018. So, I’m not trying to be all provocative and cool by claiming a 27% drop is nothing but, for Bitcoin, it kind of is nothing.
That being said, yesterday, based on my comment, could be considered a crash. Bitcoin hit a low of $30,000 (exactly) on Coinbase. That’s a fall of 53.8% from the April 13th high. It also well exceeds the most recent decline of 34.1% from January 7th ($43,591.70) to January 21st ($28,732), which happened literally four months ago.
I think it goes without saying that this stuff is volatile and that you can lose a lot of money. But, that cuts both ways. In fact, a mere three and a half hours from the $30,000 bottom, Bitcoin touched $42,990 (a 43% increase!!!). If you are willing to take a chance and have superb timing, you can make a lot of money really quickly.
Taking the broader view, Bitcoin is still doing fine since the beginning of the year (as of now). The same goes for other cryptocurrencies. Check out the “Wild Stuff” portfolio of ten cryptocurrencies I bought just after the ball dropped first thing January 1 (with return calculated as of a little after 5PM last night):
I mean, up 29.7% on Bitcoin ain’t too bad! Alt coins have done even better. And, as a whole, this group is up 246% but, sadly, that is less than the 500%+ it was up a few days ago.
In a few months (or sooner) this group could be negative for the year. After all, 80% down for Bitcoin would be $12,979. There are no guarantees about the future, though I might venture to say that the possibility of a new all-time high this current cycle seems unlikely. I also still remain absurdly skeptical of Tether.
No matter how you cut it, crypto is not for the faint of heart. Though, if you are a bit of a financial daredevil, the volatility can be a lot of fun!
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