It has been a rough week for bitcoin investors after Alphabet's Google (GOOG, GOOGL) joined Facebook (FB) in banning cryptocurrency-related ads. The price of bitcoin has tumbled more than 13 percent in the past week and is now down more than 55 percent from its December highs.
Investors have been dumping bitcoin after Google said it will no longer allow cryptocurrency-related ads starting in June, including ads for initial coin offerings, cryptocurrency exchanges, digital wallets and cryptocurrency trading advisors.
Following news of the ban, more than $60 billion of value disappeared from the global cryptocurrency market in less than 24 hours. Some bitcoin investors feel they are being unfairly penalized by such a general advertising ban.
"My only concern is that in banning all crypto ads – legitimate and not – you are painting the entire industry with a single brushstroke, which is troubling and reminiscent of big brother," says Larry Heinzlmeir, vice president of marketing and communications at HashChain Technology.
Despite the sell-off, Ivan Suhharev, director of software at peer-to-peer bitcoin marketplace Paxful, says the ban may actually be good news for bitcoin and other legitimate cryptocurrencies in the long term.
"Overall, it is a good start to bring more order to the growing cryptocurrency industry because once the scam companies have been removed organically, the legitimate ones can take their rightful place," Suhharev says.
Bitcoin and other cryptocurrencies have struggled with negative headlines throughout 2018 related to increasing regulation and security problems. A January report by Ey Research found that hackers steal as much as 10 percent of the initial coin offerings of new cryptocurrencies. Consumer protection is one of the primary reasons Google and Facebook are distancing themselves from cryptocurrencies.
In February, Berkshire Hathaway, Inc. (BRK.A, BRK.B) vice chairman Charlie Munger had harsh words for bitcoin at the Berkshire annual shareholder meeting.
"It's just disgusting. Bitcoin is noxious poison," Munger said. Billionaire Berkshire CEO Warren Buffett once famously called bitcoin "a mirage."
Still, bitcoin has plenty of supporters on Wall Street. Fundstrat Global Advisors co-founder Thomas Lee says Fundstrat's bitcoin misery index suggests the sell-off is an excellent buying opportunity for long-term investors.
"The BMI is telling us to keep the negative headlines in perspective," Lee said, according to CNBC. "When the BMI is at a 'misery' level, future returns are very good."
Fundstrat has a year-end price target for bitcoin of $25,000, and like I stated in a previous post....I COULD NOT AGREE MORE!