Bitcoin on Tuesday saw its summer rally wiped away as the cryptocurrency fell as much as 6.5% to $99,963, the first time the digital asset went below $100,000 since June. That’s down more than 20% off its record high only a month ago, a plunge that, were we talking about stocks, would be a bear market. Ether slipped as much as 9.6% and several so-called altcoins posted similar declines, bringing losses for many of the less easily traded and liquid tokens to more than 50% this year.
So why all the bad news for the funny money? The turning point came in mid-October, when a brutal wave of liquidations wiped out billions of dollars in bullish positions. Since then, traders have stayed on the sidelines. Open interest in Bitcoin futures remains far below pre-crash levels, and even with funding costs turning favorable, few are willing to re-enter. The result? Bitcoin is up less than 10% this year, lagging equities and once again falling short as a portfolio hedge.