Bitcoin is in the longest slump of its 10-year history. That is forcing even its most ardent supporters to shelve dreams of global disruption and focus on simply tightening their belts long enough to outlast the downturn.
Signs of the crypto winter are everywhere, marking a sharp reversal since the manic highs of 2017. The price of bitcoin Tuesday was just below $4,000, down about 80% from a trading peak of about $19,800 in December 2017. The total market value of all cryptocurrencies outstanding is down 85% from its peak in January 2018. And volumes on the largest U.S. exchanges have been falling steadily for the past 15 months, according to research firm TradeBlock.
Also wounded in the crash: many companies and technology platforms that promised to transform businesses from Wall Street to Silicon Valley. The young industry was built with billions of dollars raised through initial coin offerings, a method of capital raising that involves selling bitcoin-like tokens to the public. Those offerings have all but disappeared, choking off a vital funding source for the heady tech projects that were supposed to bring crypto mainstream.
Bitcoin is still driven largely by momentum, and right now it doesn’t have it. Cryptocurrencies have struggled to attract mainstream institutional investors. Regulation is still unclear, which has scared off some potential users. Companies that have sprung up around the crypto world are under pressure until the next upswing, and crypto fans aren’t sure where that will come from or when.
While bitcoin is trading well above its December 2016 level, the severity of the recent drop is raising concerns that it may never recover. The market’s long-term viability now hinges on the development of tangible uses for bitcoin and its underlying blockchain technology.