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

Thursday, 1 November 2018 01:07 - - {{hitsCtrl.values.hits}}

LONDON (Reuters): Bitcoin was heading toward 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 $ 6,263 on the BitStamp exchange, leaving investors who had bought it on Halloween 2017 facing yearly losses of nearly 3%.

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

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%.

Ten years ago, Satoshi Nakamoto, bitcoin’s still-unidentified Founder, 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% from bitcoin’s peak and the continuing but incomplete shift toward 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 crypto wealth management firm Blockstars Head Trader Josh Bramley.

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.

Bitcoin has endured year-on-year losses before, according to data from CryptoCompare, most recently in 2015. 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 rollercoaster ride in its first decade. Many told Reuters they are optimistic that they are still onto a winner.