While vacationing with friends in Buenos
Aires last month, Alex Beene, a Tennessee government worker, said the topic of
cryptocurrencies briefly came up during a dinner conversation.
The
30-year-old from Nashville told them he had bought bitcoin and litecoin last fall
but recently sold most of his holdings. The discussion quickly shifted to
another subject.
“Months ago, they
would’ve been genuinely interested in how to invest in [cryptocurrencies], how
it works, and where I [thought] the price was going,” he said. “Now it’s
something that’s the brunt of jokes, like I had invested in comic books or
baseball cards.”
After bitcoin’s frenzied rally last year, prices have lost
about two-thirds of their value from a December high. The cryptocurrency had
been trading around $7,000 in recent days, although a sharp jump Thursday
morning briefly lifted the price above $7,900, according to CoinDesk.
Nonetheless, in the past few months, bitcoin has faded off the front pages of
newspapers and it no longer dominates people’s social-media feeds.
Global internet searches for the word “bitcoin” have fallen by over 80% from
December, according to Google Trends.
Bitcoin’s average daily trading volume this month is about 70% lower than on
the most active days at the end of last year, according to bitcoinity.org. That includes steep declines on some of the
biggest U.S. platforms, including Gemini, an exchange founded by Cameron and
Tyler Winklevoss, and San Francisco-based Coinbase. At one point
in December, Coinbase was the most-downloaded free app in Apple Inc.’sApp
Store. Now, it doesn’t make the top 200.
J.C. Parets, a
technical markets analyst in New York, remembers getting multiple phone calls a
day about cryptocurrencies late last year. Clients, old high school friends,
strangers and even his 88-year-old grandmother were intrigued.
“It wasn’t even like
‘should I buy crypto’ but instead it was ‘which one?’” he said. “Everyone was
in on it.”
Four months later,
those calls stopped coming.
“Nobody cares
anymore,” Mr. Parets said.
To be sure, crypto die-hards are still
passionate about digital currencies. But many first-time bitcoin buyers who
came into the market in December and January are sitting on losses. Mainstream
interest in the cryptocurrency market has diminished.
Regulators in the U.S., South Korea, and India are
trying to curb speculative activity. Facebook Inc., Google
Inc. and Twitter Inc. are
banning advertising related to cryptocurrencies to
stop scammers from promoting fraudulent schemes on these social-media
platforms.
“All the hype is
gone,” said Vijay Boyapati, a software engineer in Seattle who previously
worked at Google and a food-delivery startup, and is nevertheless preparing to
take a job in the cryptocurrency industry. “I think right now we’re in the
boring phase.”
Mr. Boyapati, who bought his first bitcoin in 2012, has been through the
market’s boom-and-bust cycles. “Once the crescendo happens, it usually doesn’t
come back immediately,” he said.
When the investor
frenzy dies down, “that’s when the most value is created,” he added, referring
to the industry’s ability to innovate and implement new technological
advancements that “will fuel the next boom.”
Among
the cadre of investors who still believe in cryptocurrencies are the early
adopters—people who bought in years ago and remain optimistic regardless of
wild, short-term moves in prices. They buy and HODL—an acronym for “hold on
for dear life”—that often epitomizes cryptocurrency enthusiasts.
The question is whether this group is enough
to propel cryptocurrency prices back to new highs.
“There is no
question that there was mania and lots of dumb money at the top,” said Peter
Atwater, an adjunct professor at The College of William & Mary in Virginia
and a research analyst who looks at how social behavior influences financial
markets.
“The problem with
that is that the low—when it comes—will be debilitatingly low,” he said. “No
one will want to touch it. Think dot-com stocks at the low. I don’t think we
are anywhere close to that point yet.”
Bitcoin’s nearly four-month bear market has
coincided with slowing growth in the number of people opening new wallets
online to store their cryptocurrencies, according to Blockchain.info.
That isn’t a positive indicator for
cryptocurrency prices, said Nicholas Colas, a veteran analyst and co-founder of DataTrek Research , a
new research firm that analyzes financial markets, including cryptocurrencies.
“The bottom line is
that bitcoin is no different from any other emerging technology,” he said in a
recent note. “It requires incremental adoption from new users in order to grow
in value.”
And the typical mainstream investor like Mr. Beene, who works in the Tennessee
Department of Labor and Workforce Development, remains skeptical. Even though
he sold out at a profit, he said he believes cryptocurrencies “got too hot too
quickly” and he has no plans to return to the market anytime soon.
“Six months ago,
crypto was billed as the investment of the century,” he said. “Now it’s become
a fading trade that can’t live up to its lofty reputation.”
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here for the original article from The Wall Street Journal.