Bitcoin Fell Off a Cliff and No One Knows How Far It Is to the Bottom

All good things must come to an end—and bad things, too. Bitcoin has had a hell of a ride over the last year, but that all seems to be over as almost 60 percent of its value has vanished in the last month. Enthusiasm in the cryptocurrency market is low as Bitcoin dropped below $8,000 for the first time since November.

According to the popular cryptocurrency app Coinbase, the price of Bitcoin slumped to $7,540 on Friday morning before picking up to around $9,000 a little before noon. The run of thousand-percent increases was never sustainable, and even the most dedicated believers in the cryptocurrency revolution didn’t think the high of almost $20,000 would hold in the short term. But the common belief among the community has been that $10,000 was as low as it would go. Irrational exuberance inevitably invites corrections, but it’s beginning to look like we’re witnessing a massacre.

US Treasury Secretary Steven Mnuchin also said this week that he would like the members of the G20 group to discuss cryptocurrency regulations when its annual summit is held in March. The US has been mostly hands-off when it comes to cryptocurrency, electing to wait and see what happens. But the IRS still wants its cut, and investors are getting their first taste of what it’s like to pay Uncle Sam some of that free money. A visit to his accountant prompted one redditor to exclaim, “Fuck taxes man. This is so fucked it’s like I didn’t earn anything.” And it’s not just the federal government that wants its taxes; states are getting in on it, too. A bill in Arizona that would require residents to pay the state a portion of their earnings advanced toward becoming law this week.

While hugely successful companies like Facebook are trying to purge their services of cryptocurrency scams, floundering companies like Kodak have jumped at the opportunity to attract investors by slapping blockchain buzzwords onto their business plans. Kodak was supposed to launch its own initial coin offering (ICO) on Wednesday, but as more information was revealed about the company’s plans by the New York Times, Kodak said it needed more time to vet potential investors. Most of the gains that Kodak’s stock made after its blockchain announcement are now gone.

The most infamous company capitalizing on the frenzy, formerly named Long Island Iced Tea Corp, appears to have had a change of heart and on Friday it announced that it won’t be buying 1,000 cryptocurrency mining rigs after all. At the moment, the company’s name is still Long Island Blockchain.

Nobel Prize-winning economist Robert Shiller has insisted that Bitcoin will eventually “totally collapse,” even if it takes 100 years. At the moment, it’s on track to reach that goal much more quickly. Whether the “Bitcoin is bogus, but blockchain is real,” crowd will be proven right remains to be seen. Blockchain is, without a doubt, a unique technology, and lots of people are working interesting applications for it. The problem remains that the thousands of ICOs that have cropped up have their values inescapably entwined with Bitcoin. Maybe they’ll be able to disentangle that co-dependent relationship, but the expensive growing pains are certain to take a long time.