The cryptocurrency dipped below US$10,000 on January,17 for the first time since December 2017, to US$9,178, but rebounded to US$10,768 on 18 January.
Its volatility sent ripples among regulators but Professor Alam believes its bounce up and down is due to the recent announcement that cryptocurrencies would be regulated. "A major chunk of bitcoin, around 90 percent, is owned by few people and if they decide to sell their share then the price falls down."
"The price of Bitcoin is volatile because most of the investors are just going with market sentiment and don't understand the actual pricing and trading," Professor Alam said. "The huge volatility is a concern", he told Sputnik.
Bitcoin has become a buzzword in 2018, but Professor Alam remains sceptical whether the cryptocurrency has earned a place among mainstream financial names.
"Bitcoins are still not traded by big names and major exchanges are not dealing with it," he told Sputnik. "Even among the investors, prominent people like Warren Buffet is critical about it."
Bitcoin remains the world's largest digital currency and has held onto gains following its dip beneath US$ 10,000 since December but doesn't reflect the global economy as a whole, Professor Alam explains.
"The drop in value of cryptos will be more significant for individuals rather than the global market." As for what the future holds for cryptocurrencies like Bitcoin, Professor Alam believes it will survive "if the regulators are able to instill confidence among investors."
Investors reacted nervously to recent news of regulatory crackdowns on Bitcoin by South Korea, one of the largest markets for Bitcoin and China which is clamping down hard on cryptocurrencies.
Bitcoin, developed in 2009 is the first decentralized digital currency. Transactions are carried out on a peer to peer basis, no intermediary is needed. The transactions are verified by a network of nodes and recorded on a blockchain.
The cryptocurrency and its market volatility will be debated at the G20 Summit in Argentina in March 2018.
The views and opinions expressed in the article do not necessarily reflect those of Sputnik.