The biggest decline in the largest cryptocurrency since the third quarter of 2011, when Bitcoin was still in its infancy, is 58 percent, according to data compiled by Bloomberg.
Between those milestones, there were several booms and busts, with the value of cryptocurrencies rising as they became more widely used and historically low interest rates encouraged risk-taking. The amount of cryptocurrency leverage that has been unwound, however, makes the current bear market stand out, as does the regulatory scrutiny being applied to an asset class that many central banks now view as a threat to financial stability.
Prices tumbled again on Thursday, with the token sliding below $19,000. Bitcoin traded down 6% at $18,979 as of 10:39 a.m. in London. More volatile altcoins did worse, with Avalanche and Polygon falling around 10%.
The drumbeat of bad news adds up to a stinging rebuke of the crypto ethos of unbridled speculation and free-wheeling innovation: A token that was supposed to be pegged to the US dollar collapsed, almost instantly erasing roughly $40 billion of market value. Several crypto lenders were forced to halt withdrawals, leaving depositors in the lurch. And most recently, a prominent crypto hedge fund was ordered into liquidation after running up unsustainable leverage to fuel its bets.
For all the gloom, some analysts are pointing to signs that the bottom may be near. The deleveraging that accelerated the rout in past months may not have much further to run, JPMorgan Chase & Co. strategists including Nikolaos Panigirtzoglou said in a note published Wednesday. They also pointed to venture capital funding that “continued at a healthy pace in May and June.”
“Bitcoin has had good success over the last dozen years at making cyclical lows every 90 weeks,” Fundstrat technical strategist Mark Newton said. “Lows should be right around the corner according to this cycle composite, and one should be on alert in the month of July, looking to buy weakness for a healthy rebound, just as sentiment seems to be reaching a bearish tipping point.”