Bitcoin Tumble Looks Sort of Familiar

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Some market observers believe bitcoin's recent slide, the one that has seen the largest digital currency shed more than half its value since December, looks a lot like another infamous market tumble: The dot-com era Nasdaq crash.

“Bitcoin is behaving a lot like how the Nasdaq did during the dot-com bubble nearly 20 years ago, but the timeline is unfolding much faster, according to research published by Morgan Stanley on Monday,” reports CNBC. “The Nasdaq in 2000 and modern-day bitcoin both rallied 250 to 280 percent in their most 'exuberant' periods ahead of bear markets, Morgan Stanley said in a note to clients.”

In recent months, regulators around the world have stepped up scrutiny of digital currencies and related assets, including some blockchain investments. Morgan Stanley notes that bitcoin's rally was far more rapid than that of the Nasdaq in the late 1990s and while bitcoin is not old (it debuted in 2009), the cryptocurrency has already experienced multiple bear markets.

“Bear markets for the digital currency are not new. Since it was created in 2009, bitcoin has seen four of them, with price drops between 28 percent and 92 percent, Morgan Stanley strategist Sheena Shah said. Bitcoin's value has fallen roughly 70 percent from its peak near $20,000 in December to a low in February below $7,000, according to data from CoinDesk,” reports CNBC

The Morgan Stanley strategist adds that the Nasdaq's bear market in 2000 featured five declines averaging 44%, eerily similar to the average bitcoin bear market decline of 45% to 50%.

Bitcoin futures debuted on the Cboe in December, followed by a launch on the CME. Nasdaq Inc. is still considering entering the bitcoin futures competition. Market observers previously expected Nasdaq to launch futures on the digital currency this year, perhaps as early as the second quarter. After bitcoin, the largest cryptocurrencies are Ethereum, Ripple, Bitcoin Cash and Litecoin.

Earlier this month, Grayscale Investments, the operator of the Bitcoin Investment Trust (OTCQX: GBTC) introduced the Bitcoin Cash Investment Trust, Ethereum Investment Trust, Litecoin Investment Trust, and XRP Investment Trust. Coinbase, the operator of the largest U.S. cryptocurrency exchange, launched an index based on bitcoin and other digital currencies traded on Coinbase.

For more information on the cryptocurrency, visit our Bitcoin category.

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