Birthday blues for bitcoin as investors face year-on-year loss

By 1300 GMT, bitcoin was trading at US$6,263 on the BitStamp exchange, leaving investors who had bought it on Halloween last year facing yearly losses of nearly 3 per cent.
By 1300 GMT, bitcoin was trading at US$6,263 on the BitStamp exchange, leaving investors who had bought it on Halloween last year facing yearly losses of nearly 3 per cent.PHOTO: REUTERS

LONDON • Bitcoin was heading towards a year-on-year loss on Wednesday, its 10th birthday, the first loss since last year's bull market, when the original and biggest digital coin muscled its way to worldwide attention with months of frenzied buying.

By 1300 GMT, bitcoin was trading at US$6,263 on the BitStamp exchange, leaving investors who had bought it on Halloween last year facing yearly losses of nearly 3 per cent.

A year ago, bitcoin closed at US$6,443.22 as it tore towards a record high of near US$20,000, hit in December last year.

That run, fuelled by frenzied buying by retail investors from South Korea to the United States, pushed bitcoin to calendar-year gains of over 1,300 per cent.

Ten years ago, bitcoin's still-unidentified founder Satoshi Nakamoto released a White Paper detailing the need for an online currency that could be used for payments without the involvement of a third party, such as a bank.

Traders and market participants said the Halloween milestone was inevitable, given losses of around 70 per cent from bitcoin's peak and the continuing but incomplete shift towards investment by mainstream financial firms.

"The value mechanisms of crypto and bitcoin today are based more on underlying tech than hype and FOMO (fear of missing out)," said Mr Josh Bramley, head trader at crypto-wealth management firm BlockStars Capital.

 
 
 

Growing use of blockchain - the distributed ledger technology that underpins bitcoin - is now powering valuations of the digital currency, he said, cautioning that some expectations for widespread use have not yet materialised.

Others said improvements to infrastructure such as custody services may allow mainstream investors who are wary of buying bitcoin to take positions.

"We see behind closed doors financial and non-financial institutions beavering away to create the infrastructure," said Mr Ben Sebley, head of brokerage at NKB Group, a blockchain advisory and investment firm.

Bitcoin has endured year-on-year losses before, according to data from CryptoCompare.

Retail investors still account for a strong proportion of trading, market players said.

Investors who bet early on bitcoin and have stuck with it have faced a roller-coaster ride in its first decade. Many told Reuters they are optimistic that they are still onto a winner.

REUTERS

A version of this article appeared in the print edition of The Straits Times on November 02, 2018, with the headline 'Birthday blues for bitcoin as investors face year-on-year loss'. Print Edition | Subscribe