Crypto Currently is our three-times-a-week update on digital currencies in Australia and overseas.
Hello and welcome to Friday. We'll get to the bubble predictors in a moment, but let's start with a market overview. And it doesn't look great.
Anybody holding Bitcoin bought before New Year's has officially endured the virtual currency’s worst month in three years. 26 percent of whatever your holdings were worth as the sun set on 2017 has now vanished. But if you think that's bad, spare a thought for those holding Ripple who have lost an eye-watering 56 percent. But interstly, Ethereum may have attracted those fleeing the carnage to make a tidy 36 percent.
To put it all in perspective, the Wall Street crash of 1929—the one that set off a wave of collapses around the world and gave us The Great Depression and then, in a roundabout way, Hitler—saw the value of the US stock market fall 43 percent in a month. Then the crash of 2008—which we've now come to know as the Global Financial Crisis—wiped 27 percent off the stock market’s value in a month. So basically, Ripple just had its own 1929 while Bitcoin experienced a more mild 2008.
But still the question looms: are we seeing the start of a marketwide crash?
Economists and other boffins have developed elaborate mathematical techniques to forecast imploding bubbles, although it must be said that a great number of which regularly fail to even predict bears defecating in the woods. But there is however, a slightly less sophisticated measure of a bubble, and that's absurdity. Basically, how absurd have things got?
Well, in the world of cryptocurrency we now have Dogecoin, the currency founded as a “pisstake” by Sydney man Jackson Palmer that features the face of the Shiba Inu dog made famous by a 2013 meme. Current market value: $2.4 billion.
Or we have the case of the "oil backed" cryptocurrency Petro, about to be launched by the Venezuelan government, who expect to raise USD$6 billion. The problem? Venezuela’s track record of managing its actual, regular currency is completely abysmal. During 2017 the Venezuelan inflation rate was 2,616 percent. To put this in perspective, imagine your rent is $200. So in the first week of January you pay your $200, but in week two you pay $265. By July it’s $1,045 and when you make your final weekly payment for the year, it's $4,121. And now Venezuela is offering to sell you cryptocurrency as an investment. Up to you.
So maybe it’ll all bounce back, but you’ve got to admit it—the whole thing has got silly.
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