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Chart of the Day / Crypto Meltdown: Why Coins just Lost $42 Billion in Value

Crypto Meltdown: Why Coins just Lost $42 Billion in Value

June 11, 2018

For quite some time, Bitcoin was the hottest trade of the decade.

At nearly $20,000 at one point, it outperformed stocks, bonds, gold and real estate.

And for many investors, it became the “can’t lose” trade of the decade.

Until recently, as it plunged from $7,500 to $6,796.

  • Ethereum (ETH) fell from $699 to $531
  • Ethereum Classic (ETC) fell from $15 to $12.87
  • Ripple (XRP) fell 65 cents to 58 cents
  • Litcoin (LTC) fell from $120 to $107
  • IOTA (MIOTA) fell from $1.80 to $1.37

At one time, the excitement over Bitcoin was palpable as it ran from less than $1 to nearly $20,000 in a few short years.  But as quickly as the crypto currency exploded, it came down just as fast.  In fact, just days after nearing $20,000, Bitcoin plunged to less than $7,000 in wiping out billions of value.

That’s not to say the run higher in each crypto currency is over.

It’s just a stark reminder that obscene volatility does exist in the space.

We have to remember that markets are littered with popped bubbles from the tulips in the 1600s to the Internet boom and the U.S. housing market fiasco.

So, it’s our responsibility to be aware of the potential for downside, as we’ve noted.

Volatility is nothing new when it comes to crypto currency.

  • In June 2017, Bitcoin prices fell more than $200 between June 25 and June 26, for example.  Any one that conducted any transactions would have seen a 7% to 10% decline in deal value wiped out.
  • In September 2017, Bitcoin plunged from a record high of $4,921 on the first of the month to $2,957 by the 15thon concerns of increased scrutiny from Chinese officials and a host of expert that have slammed the currency as a fraud.
  • By February 2018, it plunged from nearly $20,000 to less than $7,000 in weeks before rebounding.

In early June 2018, even more value was wiped out after an exchange hack of Coinrail in South Korea.  In a statement, Coinrail noted that hackers stole up to 30% of the coins from its storage.

The Coinrail theft is the fourth major cryptocurrency exchange hack this year, according to Mashable.  In January, $400 million worth of cryptocurrency was stolen from from Japanese exchange Coincheck, and in February, $200 million worth of cryptocurrency went missing from Italian cryptocurrency exchange Bitgrail. In April, cryptocurrency exchange Coinsecure noted some $3.3 million worth of Bitcoin were stolen from its wallet.

Again, this isn’t to say crypto is a dead trade. It’s not.

Analysts believe there’s plenty of growth remaining.

However, we must be wary of risks and volatility, or we don’t belong trading crypto at all.