Despite a drop of more than two-thirds of its value, it is not ‘throwing in the towel’
By AFIQ AZIZ / Pic By BLOOMBERG
How do you define bitcoin’s rollercoaster ride in the last 13 months? Crazy is not even close. For owners of the digital token, their hearts would skip a few beats.
Many are left cursing their luck for not disposing the cryptocurrency when the price nearly surpassed the US$19,000 (RM73,853) level.
Market watchers and economists are left dumbfounded on bitcoin’s phenomenal rise and tumble. Latecomers who wanted to hitch a ride on the bitcoin waves are reeling at their losses.
Bitcoin’s almost 1,900% rise had defied logics or economic fundamentals.
Despite the drop to about US$8,500 last Friday, more than two-thirds of its highest value, the mother of cryptocurrency is not throwing in the towel as the leading digital token.
An analyst said the price volatility has always been a part of bitcoin’s DNA since it was established nine years ago. The digital token had more than a fair share of its ups and downs.
In the early 2013, the token rose about US$14 and folded up to US$1,000 or 71-fold jump.
“That rise was an eye-opener to investors. Many investors became instant millionaires. It is like the harvesting season for the investors,” CRA Global CEO Mohd Roshaimi Mat Rasid told The Malaysian Reserve (TMR).
Roshaimi said in January 2015, bitcoin dropped to a low of US$152 but closes the year at US$430.
At the beginning of 2016, the currency was trading at US$352 but later jumped to more than double, or US$966, at the end of the same year. But nothing compared to last year.
Bitcoin was trading at US$755 before its meteoric rise to almost US$20,000 in December.
And investors can expect the same stomach-turning ride if history is your reference.
Authorities around the world had tried to stamp some controls on cryptocurrencies.
Its rising phenomenal had left monetary authorities scurrying for solutions. Central bankers around the globe have always had a control over their fiat money but cryptocurrencies had put a dent on such a control.
State actions over banning cryptocurrencies had strongly influenced the digital token’s value.
South Korea had recently proposed to ban anonymous bank accounts that were used to buy and sell cryptocurrency in a country in one of the world’s most popular bitcoin markets.
That decision alone had punished bitcoin, forcing the currency to tumble into a free fall.
“There are a lot of variables determining cryptocurrency price including authority interventions and speculations by big corporations,” said Mohd Roshaimi.
He said even big corporations are speculating on the commodity, pushing the price of bitcoin down and like any avid investors, going into the market when the price is lower.
China from the onset had banned cryptocurrency and pulling the shutter down on all local digital currency exchanges.
But bitcoin supporters still feel a return for the digital currency.
“Most of the players are only expecting the price to hit US$10,000 this year, if not next year. But the fact is it had jumped double than our projection last year.
“Despite all the hassles and banned issues, the price is still within the prediction bracket. That proved bitcoin’s track record compared to other alternative coins,” Mohd Roshaimi said.
A bitcoin developer Peter Macaulay said bitcoin price volatility was a normal occurrence and the price would reach a stabilisation point before rising again.
What is currently dragging bitcoin are high transaction fee and longer transaction time due to severe scalability issue.
A bitcoin user would have to pay up to US$10 and taking more than 10 minutes to conclude one small transaction.
Such drags would provide the impetus to the rise of other tokens like ripple, ethereum and bitcoincash.
Macaulay said a new protocol is expected to make way this year called “lightning protocol”.
“Lightning is a new protocol on top of bitcoin which enables faster transactions, helping bitcoin user to trade general items such as food and beverages, online shopping and buying airplane ticket,” the Singaporean- based developer told TMR.
Macaulay said bitcoin is also backed by the fact of its limited availability.
Currently, 16.8 million of bitcoins are already being circulated in the market with the limit of 21 million supplies.
While many had thrown in the towel or read the last rite for bitcoin, it is certainly not going to go away and another sprint could be on the card.