The dramatic plunge in Bitcoin and other cryptocurrencies over the past two days erased almost $300 billion dollars in total market cap. Investors who bought Bitcoin around its peak of $20,000 would have suffered the most as the price fell below $10,000 on Wednesday. It is even more painful for people who decided to borrow money and buy the digital currency, fearing that they would miss the greatest opportunity ever in financial markets.

South Korea and China regulators were the ones to be blamed after they signaled plans to crack down on cryptocurrency trading. In 2017 cryptocurrencies were resilient to such news, particularly after China decided to shut down exchanges dealing with digital currencies in September. Back then, the bitcoin price plunged more than 30% from $4,900 to below $2,900. Three months later, it managed to march towards $20,000, suggesting that such actions attracted more investors. Given that traders and investors may always find a way to circumvent local restrictions, in theory, restrictions should have a limited impact in the longer run. However, when the fight becomes global against cryptocurrencies, this should become a serious warning signal.

Finding a fair value in cryptocurrencies is an impossible mission, as animal spirits will remain the key driver. Most people who were buying bitcoin and other cryptocurrencies most recently, are not using them for transactions, but holding them in the expectation of profiting from the endless rising price. Whether the animal spirits have already released their grip, remains to be seen and cannot be ascertained from a two day slump.

Brick and mortar stores have been very slow to accept cryptocurrencies as a method of payment. This is what worries me most. If we don’t see growth in their acceptance as payment method, then it is not serving its true purpose.