Bitcoin slid to the end of 2014 on a trajectory steeper than the Russian ruble. The cryptocurrency's drawn-out fall came to a crash point to ring in 2015.
Then came a security breach on its exchange Bitstamp.
One of those events is more than enough to make a struggling currency run and hide, but bitcoin is on the rebound, up 4.63 percent. Yet there's no doubt the latest episodes of volatility are only stirring the mixed amalgamation of forecasts for the digital currency's long-term viability as a mainstream currency.
The bad press surrounding a security breach on the Bitstamp exchange accentuated the latest bitcoin crash and fed the furnace of pessimism, yet not everyone sees a gloom and doom future. Shawn Budde, CEO of online payments processor 2Checkout, tempers the bitcoin pessimism by putting the currency's status into perspective.
"The price of bitcoin dropped dramatically in in 2014 and early during the new year," Budde tells Tech Times. "However, it's easy to forget that bitcoin was trading at around $13 in January 2013. So, over a two-year period it is still up meaningfully."
Peaking at approximately $980 on Nov. 25, 2013, bitcoin has been almost steadily sliding to its current valuation of roughly $294 on its exchanges. Bitcoin fell about 11 percent to $280 on Jan. 3 and bottomed out at about $263 by CoinDesk's Bitcoin Price Index.
Bitcoin could be nearing its floor, but Budde points out the currency's price right now is still approximately 20 times higher than it was in January 2013. It could still take a significant plunge and still rest above where it sat two years ago, the 2Checkout CEO points out.
The worst may not be over, but bitcoin's current valuation could attract those whose stomachs turned when the cryptocurrency careened past their preset thresholds, notes Andrew Hinkes, counsel at Florida law firm Berger Singerman.
"Researchers looking at the market have noted the recent sag in market price was correlated to automatic sell triggers, so those who wanted to insulate themselves from continued losses are out of the market, and the current price levels may be low enough for those investors, or other opportunists, to jump back in," Hinkes told Tech Times.
Budde and Hinkes agree bitcoin has already proven its utility and now needs greater adoption across the board. Budde says more users would help bitcoin's long-term stability, while Hinkes says regulatory safeguards would harden the currency to the forces of the market.
"Bitcoin's market price will stabilize as it achieves broader adoption, and as it is further regulated," Hinkes says. "Bitcoin, as it is currently used, is a poor candidate for use as a unit of account because of the lack of a central authority who can manipulate its value."
This is the first part of a two-part series on bitcoin and cryptocurrency. The second part will publish Thursday, January 15 on Tech Times.
