Cryptocurrency prices have also fallen sharply. Bitcoin dropped to $26,000 on Thursday, down 60 percent from its November peak, before rallying somewhat. Since the beginning of the year, the Bitcoin price movement has been closely reflected The Nasdaq, a heavily weighted benchmark toward technology stocks, suggests that investors treat it like any other risk asset.
The price of Ether has also fallen, losing more than 30 percent of its value over the past week. Other cryptocurrencies, such as Solana and Cardano, also fell.
Some analysts said any panic may be exaggerated. A study conducted by Mizuho shows that the average Bitcoin owner at Coinbase will not lose money until the price of the digital currency drops below $21,000. This, according to Mr. Dolev, is where the true death spiral can occur.
“Bitcoin has been working as long as no one is losing money,” he said. “Once you get back to those levels, it’s kind of an ‘Oh my God’ moment.”
Professional investors who weathered past cryptocurrency volatility also kept their cool. Hunter Horsley, CEO of Bitwise Asset Management, which provides crypto investment services to 1,000 financial advisors, met more than 70 of them this week to discuss the market. He said that many of them did not sell, because all other assets were also idle. Some were even trying to take advantage of the drop.
“Their point is, ‘This is no fun,’ he said, ‘but there is nowhere to hide.”
However, the price drop has shaken cryptocurrency traders. Just a few months ago, blockchain proponents predicted that the price of Bitcoin could rise to $100,000 this year.
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