Ether, the world’s second-most valuable cryptocurrency, has been tanking since hitting a peak in mid June, highlighting an extended selloff in buzzy, digital currencies that had been on a tear only a few short weeks ago.
A single ether token on Tuesday briefly slipped to a six-week low, dropping under $200 and marking a 48% decline, giving up about $17.5 billion since reaching its best-ever market capitalization of $36.7 billion on June 14, according to data from Coinmarketcap.com. Most recently, one ether was trading at 202.37, down 4.3% on Tuesday, according to data from popular digital-currency data-provider Coindesk.
he downdraft for ether, which powers the ethereum blockchain and is the main rival to more prominent bitcoin, is occurring amid a broad slump in the cryptocurrency universe, which had racked up dazzling, quadruple-digit gains within a short period. Ethereum’s ether, for example, had surged by more than 4,000% — from $8 in January to its June peak of around $400 — before mounting its recent pullback.
Attention from large corporations, including Fidelity Investments, and flirtations with the possible inclusion in popular trading products, like exchange-traded funds, also have helped to stimulate interest in bitcoin and other cryptocurrencies.
However, worries about the speed of the advance for digital currencies, light regulation and a lack of broad usage has given many skeptics reason to call for caution in investing in bitcoin and ether, which some analysts say displays similar attributes to gold GCQ7, +0.28% viewed as a haven asset.
More broadly, the combined market value of an array of digital currencies, including ether, bitcoin, and others like ripple and litecoin, are down by about 28% to $82 billion currently from $114 billion last month. Bitcoin BTCUSD, -2.68% maintains a dominant position among so-called digital currencies, but has led the way lower, off 20% since surpassing $3,000 a coin mid-June.
By comparison, the Dow Jones Industrial Average DJIA, +0.00% has tacked on 0.7%, the S&P 500 index SPX, -0.08% has slipped 0.2%, while the Nasdaq Composite IndexCOMP, +0.27% has advanced 0.3% over the past month, despite a choppy trading environment marked by concerns about earnings growth and President Donald Trump’s Wall Street-friendly agenda.
All that said, cryptocurrencies are still holding on to sizable returns, even factoring in the recent downdraft. The question is: are they facing a brief pause in their rise, or suffering through what will become an extended period of pain?
Wall Street analysts are split on the future for cryptocurrencies. Morgan Stanley analysts predict that they won’t rally further unless they get “governmental acceptance,” including more regulation.
Meanwhile, Fundstrat’s Tom Lee, a Wall Street equity strategist, says bitcoin may trade at $55,000 a coin by 2022.