The recent meltdown in cryptocurrency valuations has been all encompassing. No programs, except for perhaps stable coins that are pegged to fixed asset values, have been immune. Bitcoin, the leader of the pack, has been hit hard, losing some 80% of its value from last year’s peak just below $20,000. The carnage, however, has been greater for other altcoins. One mind-blowing statistic is that the top 75% of existing programs have fallen 90% from their recent peak values, yet no one is saying cryptos are dead.
Bitcoin has also been struggling for the past few days, trying its best to stay above $3,500, a prominent support level. It has tested this region before, but it rests today at $3,600. Bitcoin’s share of the overall market cap has also increased a few percentage points, thereby suggesting that other systems are feeling more pain. Stocks are also in a tailspin this week. The S&P 500 is down 5.4% in two days, which is 10% below its 52-week high. Investors are said to be edgy over trade negotiations and a general slowdown in the global economy. Margin calls in the equity arena can often ignite selling of higher risk assets, i.e., cryptocurrency positions, to cover open positions elsewhere.
If you review the top fifteen systems and ignore stable coins, there are only four coins that have declined less than the 90% watermark – Bitcoin (BTC), Stellar (XLM), Monero (XMR), and Binance coin (BNB). The latter Binance coin is a bit of a special case anomaly. BNB has a level of support, missing from all of its brethren coin systems. The world’s largest exchange, Binance, is committed to a quarterly buyback program, whereby 20% of its profits are used to “repurchase and destroy BNB tokens until the supply has been cut in half.” Even with this support, BNB values have declined 73%.
The Number 2 and 3 programs are suffering, too. Ripple (XRP) is off 91% from its January high, and Ethereum (ETH) is down 92% from its highpoint. Bitcoin Cash (BCH), which also had to weather a contentious “hardfork” in November, was blitzed by 97%. Cardano (ADA), another market leader, also suffered a 97% haircut. NEO and NEM (XEM) have each toppled 96%, but the latter product has also had to absorb a major hacking compromise back in January. $530 million in XEM coins disappeared from Coincheck, a crypto exchange based in Tokyo. To round out the “90% and up loser’s club”, we have Tron (TRX), IOTA, Dash, EOS and Litecoin (LTC), although the latter two were fortunate enough to be below 95%.
“Winter is coming” may be a warning call heard in several quarters, but Winter has already hit cryptocurrencies with a vengeance, well ahead of its expected arrival date. Investors, however, are not fleeing to safe havens in mass, at least not yet. Industry pundits are still forecasting days of prosperity in future, but only time will tell us when.