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Opinion
Jonathan Levin

The Amazon of Crypto Is Out There. So Is the Pets.com.

A dot-com-like shakeout for digital currencies can weed out the wannabes and set the stage for true innovation.

Bitcoin and Ether are essentially holding their own in the chaos.

Bitcoin and Ether are essentially holding their own in the chaos.

Photographer: Joe Raedle/Getty Images

Spawned from the ashes of the global financial crisis, cryptocurrencies have benefited from an extraordinary period of economic growth and easy monetary conditions that pushed their combined market capitalization to nearly $3 trillion last year. But the party is ending abruptly thanks to 40-year-high US inflation and the expectation that central banks worldwide will rapidly raise interest rates and withdraw stimulus to rein in prices. A bubble fanned by easy money is popping, and the selloff is likely to deepen.

Bitcoin and Ether have each lost more half their value since November; the most speculative “meme coins” are now down 80% or more; and so-called stablecoins meant to trade at a set dollar exchange rate are suddenly wobbling.