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Cryptocurrency prices have also plummeted. Bitcoin price dropped as low as $26,000 on Thursday, dropping 60 percent from its November peak and before surging a bit. Bitcoin’s price action since the beginning of the year closely mirrored Nasdaq’s, a benchmark that weights tech stocks, suggests investors treat it like any other risk asset.
Ether’s price has also dropped, losing more than 30 percent of its value last week. Other cryptocurrencies like Solana and Cardano are also on the decline.
Some analysts said any panic could be overkill. A study by Mizuho showed that the average Bitcoin owner on Coinbase will not lose money until the price of the digital currency drops below $21,000. According to Mr. Dolev, this is where a real death spiral can occur.
“Bitcoin was working as long as no one was losing money,” he said. “Once you get back to those levels, it’s kind of a ‘Oh my God’ moment.”
Professional investors who have survived crypto volatility in the past have also remained calm. Hunter Horsley, CEO of Bitwise Asset Management, which provides crypto investment services to 1,000 financial advisors, met with more than 70 advisors this week to discuss the market. Many were not selling because all other assets also fell. Some were even trying to take advantage of the fall.
“Their point of view is, ‘It’s not fun, but there’s nowhere to hide,'” he said.
Still, falling prices have rattled crypto traders. Just a few months ago, blockchain advocates predicted that the price of Bitcoin could rise as high as $100,000 this year.
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