After a spectacular performance in 2013, bitcoin’s fortunes have nosedived this year. You’d have had to hunt pretty hard to find a worse investment over the first three months – with a 38% loss, the trendy crypto-currency that had been rapidly becoming mainstream, was announced the worst investment idea in the world, far ahead of its closest competitor in this sad rating, Argentina Peso.
Garrick Hileman, Economic Historian at the London School of Economics, gives his reasons for this impressive fall:
“We had one of the largest exchanges lose close to 800.000 bitcoins, which is worth about half a billion dollars at the time. We’re still not sure what exactly happened but that really shook trust in bitcoin in general, and the price reacted accordingly. [00.46] Another factor that was driving the price down was concern over Chinese regulation in March and April, and in sense when the People’s Bank of China said they weren’t going to ban bitcoin would actually have seen an increase, a rebound in the price of bitcoin.”
Indeed, through the end of May, the crypto-currency was no longer the absolute worst thing to buy this year, it became merely the third worst, after iron ore and Argentine Peso, according to FactSet.
Bitcoin world has seen many twists and turns in 2014, from claims on the identification of the founder to a theft at a major exchange by hackers and an exchange bankruptcy. There’ve been also some positive developments as a bonus for the bitcoin faithful as large companies like Apple, Dell and Dish came out and embraced it. In mid August it faced a 12% tumble.
Now, the most intriguing question is what lies ahead for the mysterious innovative product of the 21st century, at least by the end of this year.
Garrick Hileman sees no certainty:
“It is going to be a balance between the negative and the positive, and that will drive the price action through the remainder of the year.”
But if you’re dreaming of a space travel and have some bitcoin stock in your possession, you can still pay for tickets using crypto-currency, it’s still allowed, but hurry up, just in case.