Bitcoin peaked at over $ 19,000 in December 2017. It is currently trading at around $ 4,600.
So it seems safe to say that the bitcoin bubble has exploded. Should investors start relocating bitcoins and other encrypted assets?
Maybe. Some bitcoin bulls are welcoming recent volatility. It may scare some of the momentum investors who have rushed, which means bargain hunters can accumulate bitcoins at a more attractive price.
"Experienced investors understand that digital currencies are the future of money and, as such, will capitalize lower prices to build their portfolios and strengthen their positions," said Nigel Green, CEO of deVere Group, a company financial consulting firm.
"Financial traditionalists regard cryptocurrencies as traditional stores used to display online retailers," said Green. "Cryptic crypts are using this current wave of volatility to knock on digital currencies: whether it's Bitcoin or any coin generation, or not, cryptocurrencies are here to stay."
SEC that keeps the Fishers in the eye
It's also a more technical reason, for which the bitcoin is going down.
In the last year, bitcoin went through a division process known as fork. The first fork has created bitcoin liquidity and bitcoin money has recently been split into two other forks. For the average investor, this basically means only more volatility.
But there are still some potential problems for bitcoin and the legion of other cryptos out there, such as ethereum, litecoin, ripple and stellar. Even their prices have plummeted recently.
Part of the problem is a bubble mentality. Short-term investors are all trying to get rich quickly with these cryptocurrencies, as well as with initial coin offerings or ICOs. Those are securities guaranteed by cryptographic assets.
But they are incredibly risky. And the Securities and Exchange Commission is starting to crack down on ICOs that do not exceed regulatory requirements.
"The SEC reminded the cryptic world that has the final word on everything that smells of security," said Naeem Aslam, chief market analyst at Think Markets UK. "The fear is that the SEC will not stop here and could take similar actions against several companies that have adopted a similar path.
He claimed that many companies will not be able to raise more capital and will not be able to survive.
"The current bear market will hurt in no time, both for crypto funds and for ICO projects, and pain is something that many of these entrepreneurs and managers have never faced," wrote Pompliano.
But he sees the light at the end of the tunnel. Pompliano believes that the current shakeout is necessary. It will free the market from weak hands and leave only the real crypto-believers – as opposed to traders – to thrive from continued global growth in the cryptic world.
"Things will be much worse before they get better." All right, remember, leads the markets to get rid of tourists so that real entrepreneurs can focus on building sustainable value, "wrote Pompliano.