Crypto Mania Morphs From Digital Gold to What Was I Thinking?

What a difference a year makes. At the end of 2017, investors were willing to pay almost double the underlying value to buy a stake in Bitcoin’s lone U.S. investment trust. Now the premium is almost nonexistent in the wake of the roughly 70 percent plunge by the biggest cryptocurrency.

The mania among individuals investors and speculators isn’t the only demand to cool. Funding from so-called initial coin offerings has also dried up sharply since midyear. Many of the startups that have succeeded in raising money in this manner have felt the sting of the digital asset market’s collapse, ...