Wild fluctuations in the Bitcoin market have once again sparked debate among investors who believe it is merely undergoing a “correction” and those who see it as a costly fad.
After a buying fever at the end of 2017 that sent the price of a token to nearly US$20,000 and a spectacular fall at the beginning of the year, bitcoin’s price made a modest recovery before falling sharply again this month.
“This is a healthy correction after an exuberant 2017,” said Kyle Salmani, founder of cryptocurrency fund Multicoin Capital, which manages US$50 million of private cash.
Despite his optimism for the sector, Salmani’s fund is not betting on a rise in bitcoin prices, instead focussing on competitors with more an impressive recent track record and more innovative technologies.
Bitcoin now makes up only 40 percent of the volume of crypto-currency transactions, having accounted for 80 percent of the market just a few months ago, according to coinmarketcap.com data.
The weekly number of Google searches containing the term bitcoin is five times lower than at its peak, in the week of Dec 17 to 23.
Bitcoin now trades at around US$8,000, compared with US$19,511 at the end of December, according to Bloomberg figures.