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Bloomberg Compares Bitcoin's Plunge to Pets.Com
Capital Markets, FinTech
If you are company attempting to reinvent your brand, you probably don’t want to hear the business press compare your rebranding to New Coke, the infamous, failed experiment undertaken by the Coca-Cola Company to tweak the formula of the most popular soft drink in the world.
Similarly, if you are seen as being at the forefront of a new innovation wave that is aiming to disrupt our very way of life, you probably don’t want to be compared to the 1990s dot-com era. And you definitely don’t want to be compared to Pets.com, which – fair or not – is often held up as the symbol of one of the the Dot-com bubble’s main problems: There was a lot of money spent on generating marketing hype by the startups, but very often no fundamentals to back up that hype.
Which brings us to Bitcoin, the world’s largest cryptocurrency and the face of everything that is deemed good and bad with the market. Right now things are bad for Bitcoin – and therefore cryptocurrencies in general – and Bloomberg has brought up one of the most dreadful analogies to explain just how bad things are going at the moment.
Explaining Bitcoin’s plunging price as a “bloodbath,” Bloomberg‘s Adam Haigh and Eric Lam draw a direct line to the dot-com crash.
Down 70 percent from its December high after sliding for a fourth straight day on Friday, Bitcoin is getting ever-closer to matching the Nasdaq Composite Index’s 78 percent peak-to-trough plunge after the U.S. dot-com bubble burst. Hundreds of other virtual coins have all but gone to zero — following the same path as Pets.com and other red-hot initial public offerings that flamed out in the early 2000s.
Bitcoin was trading at $5,872. 70 at 1 PM on Friday in New York. It had fallen as much as 4.2 percent to $5,791 earlier on Friday, according to Bloomberg.
Things are even worse for other digital coins, as Bloomberg notes.
Lesser-known tokens have been hit the hardest. Dead Coins lists around 800 that are effectively worth nothing, while Coinopsy puts the tally at more than 1,000. Fewer than 4 percent of coins with market caps from $50 million to $100 million were successful or promising, according to a March analysis from ICO advisory firm Satis Group.
Bloomberg also points out that while Bitcoin has actually rallied from worse drops in the past, “it’s far from clear that it can repeat the feat now that much of the world knows about cryptocurrencies and has made up their mind on whether to invest.”
Photo: Getty iStock