By Jack Kelly
Bitcoin and cryptocurrencies were slammed in the global market selloff.
There’s an old Wall Street adage: when the tide goes out, you can see who’s been swimming naked. Now, we know all of the stories about Bitcoin and other cryptos seem to be a little questionable or even fictitious. They aren’t a port in the storm. The digital currencies have been frantically sold off like all other securities.
Bitcoin and cryptocurrencies were supposed to be non-correlated to the stock market. The big hype about buying Bitcoin and other cryptocurrencies was that it was separated from the overall market. It was touted as gold, only better. The problem is that when Bitcoin was supposed to shine, it didn’t. The digital currencies plummeted along with the stock market, freefalling over 25% last week. The cryptocurrency industry lost $62 billion in market capitalization in last week’s carnage. Bitcoin was trading around $5,700 from a high of around $20,000. The price of the digital currency was about $10,400 on February 12 and lost roughly 50% in value within a month.
To be fair, margin calls have forced traders and investors to sell their holdings. The “hodl” —holding on and not selling—bragging seems to have been broken.
This raises a number of unanswered questions: what value does Bitcoin and cryptos really offer? Is it dominated and manipulated by a handful of powerful holders? What’s behind its meteoric rise and dramatic crash from the all-time highs?
After the dust settles and we enter a new post-coronavirus stage, the public will demand answers to these questions.
It’s not just Bitcoin. The American public deserves to know how we allowed our country to become so vulnerably dependent upon China and why our government doesn’t have a viable quick-action plan to deal with pandemics.
Also, will anyone at the Federal Reserve Bank acknowledge their part in enabling the stock market to grow to precarious heights based largely on their policies. Their programs and actions created an enormous bubble that burst now causing massive financial and economic carnage.