Cryptocurrencies are melting in a ‘perfect storm’ of fear and panic

Cryptocurrency prices also fell precipitously. The price of bitcoin fell to $26,000 on Thursday, down 60% from its peak in November, before rising somewhat. Year-to-date, Bitcoin’s price movement has closely mirrored that of the Nasdaq, a heavily weighted benchmark to tech stocks, suggesting investors are treating it like any other risky asset.

Ether’s price has also fallen, losing over 30% of its value over the past week. Other cryptocurrencies, like Solana and Cardano, are also down.

Any panic could be overdone, some analysts said. A study by Mizuho showed that the average owner of Bitcoin on Coinbase would not lose money until the price of the digital currency fell below $21,000. This, according to Mr. Dolev, is where a real death spiral could occur.

“Bitcoin worked as long as nobody lost money,” he said. “Once it gets back to those levels, it’s kind of an ‘Oh, my God’ moment.”

Professional investors who weathered the volatility in crypto also remained calm. Hunter Horsley, managing director of Bitwise Asset Management, which provides crypto investment services to 1,000 financial advisers, met with more than 70 of them this week to discuss the market. Many weren’t selling, he said, because all other assets were down as well. Some were even trying to capitalize on the decline.

“Their point of view is, ‘It’s not fun, but there’s nowhere to hide,’” he said.

Still, the price crash has rattled crypto traders. Just a few months ago, blockchain proponents predicted that Bitcoin’s price could hit $100,000 this year.

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