Anyone who decided to take the plunge and buy bitcoin in the last month is not having a merry Christmas.
The cryptocurrency markets are in free fall, with bitcoin trading down around $12,000 Friday after crashing overnight. That’s down from a Dec. 17 peak of around $19,992. The staggering price drop finishes off a months-long bull market run in which their value increased by billions of dollars.
But crypto missionaries — the investors and traders who've been buying and selling currencies like ethereum and bitcoin for more than just the past few months — aren’t completely melting down. On forums like the r/bitcoin subreddit, the most popular posts are jokes about the weak stomachs of newbies and jokes about a 25 percent Christmas sale on bitcoin.
That’s because it’s not totally abnormal for bitcoin to shed something like 25 percent of its value over a few days, according to bitcoin experts who spoke to VICE News.
“We've had a few drawdowns — drops of 30 percent-plus — of this magnitude in 2017,” said Chris Burniske, author of the investor’s guide “Cryptoassets.” “In the traditional markets, anything over 20 is a bear market. But in crypto markets, we've seen this historically pretty regularly.”
For example, one such slide came between June 20 and June 23 last year, when the price of bitcoin fell 23 percent from $761 to $586 a coin over three days. The main reason swings are so volatile now, according to crypto investor and analyst Alex Sunnarborg, is because of all the new “retail” (mom and pop) investors who are behind the buying frenzy of the past few months.
“Dramatic dips like this are emphasized by the large inflows of new retail money which are relatively 'weak hands' and much more prone to sell at the sight of dropping prices,” Sunnarborg said. “As opposed to the capital that has been in the system for longer, invested by those who are more used to the volatility and have a much longer-term outlook.”
Still, that doesn’t mean longtime bitcoin diehards aren’t getting some heartburn over the massive price drop of the past few days. The most upvoted post on r/bitcoin at one point on Friday morning was a video of a man sliding down an escalator and flying into the ground, captioned “Bitcoin today.”