Call it the crash before the crash. At this writing, bitcoin has breached an important psychological level, below $30,000. Dogecoin is down more than 20 percent, and now can be had for 17 cents.
Any number of other cryptos are plummeting, too. But bitcoin and Dogecoin may stand as the key poster children, you might say, for the manic highs and lows that have become a hallmark of cryptos.
As for the crash – a Dogecoin-themed car crashed at the NASCAR Xfinity Series Race in Tennessee this weekend. Per sites like Yahoo! Finance, the word “foreshadowing” pops up a lot. But we note that the presence of a Dogecoin-themed car at the race in the first place signals a bit of “jumping the shark” for cryptos. It seems that the joke coin being emblazoned on a car and memorialized in what is arguably one of the most popular sports in the country is a bit of a knowing wink to the public at large – i.e., isn’t this all a bit … surreal?
Yet there are some very real, fundamental issues bedeviling cryptos that no amount of pop culture can salve.
The very means of the product of bitcoin are under fire. And the very (big) promise of cryptos making it into the mainstream as units of currency and commerce gets pushed back a bit when we see 20 percent spikes or nosedives underscoring the volatility that might make consumers (and definitely regulators) wary.
As noted in this space, China has been cracking down on bitcoin mining within the country. As of last week, all cryptocurrency mining operations were shuttered by officials in Sichuan, after the State Council’s decree in May to halt bitcoin mining and trading.
It’s a significant move, as roughly 50 percent of bitcoin production (via computer hardware and software, of course) stems from China. Shutter that supply, and there’s less bitcoin to go around, which might (conceivably) support the price, due to scarcity value, but suspend the trading — and then, it’s just something that’s outlawed. Indonesia, notably, also banned crypto as a payments tool.
China’s own crackdown is also leveraging large banks to be enforcers, as the financial services sector has been prohibited from providing crypto-related services. In a sign of how much China intends to shift crypto to the side and bring its own digital yuan into the mainstream, government-owned banks in the country are allowing customers to exchange digital yuan and cash yuan at ATMs. The flexibility of moving between those payment modalities might get consumers more comfortable with using the digital offerings on their own timetable.
There are also other signs that the lure and enchantment of cryptos might be waning. Investors and speculators vote with their feet, you might say. Case in point: Coinbase is trading as a “busted” IPO. Earlier this year, the company ended its first day of trading at $328, and had hit more than $380 in intraday trading; as of Tuesday (June 22), it was changing hands at $211.
Earlier this month, Yahoo! Finance reported that crypto exchange outflows are at heightened levels, where, the thinking goes, a bottom forms for trading and pricing. Yet this fresh new wave of selling and continued volatility (with downward pressure on prices) may indicate that the bottom is not in.
As for that Dogecoin car crash, the joke coin looks more like a prophet of things to come.