The month-long cryptocurrency slide continued overnight with ether, the cryptocurrency of the Ethereum network, falling below $100 for the first time since May 2017. Ether’s value is down 93 percent from its January high above $1,400.
Bitcoin reached a 2018 low of around $3,500 last week. It’s now trading at around $3,700, down 80 percent from its high of almost $20,000 last December.
There doesn’t seem to be any specific cause for recent declines. Rather, the steadily declining prices seems to reflect a general decline of enthusiasm for the cryptocurrency.
Blockchain-oriented startups raised $597 million in venture capital in 2016, $876 million in 2017 and $3.1 billion so far in 2018, according to data compiled by Coindesk. Despite that massive, years-long investment, the technology hardly seems closer to mainstream adoption than it was a couple years ago.
Some of the most successful blockchain startups to date have been exchanges like Coinbase that enable users to trade cryptocurrencies and conventional money. But no one has figured out how to build widely used consumer applications based on blockchain technology.
Unless and until that happens, we may continue to see the value of cryptocurrencies continue to go down over time. Virtual currencies surely have some value as a hard-to-trace store of value and a way to conduct illicit transactions, but the sky-high valuations of the last year were based on the assumption that blockchain technology would have broader uses. And so far, that hasn’t proved to be true.