Markets
The bitcoin fad is fading – for now
Bloomberg 
For the past month, bitcoin’s price has stalled between US$8,500 and US$11,300
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SUDDENLY, bitcoin seems a bit boring. It might be hard to believe. But after the 1,400% rally last year – with wild swings along the way – the great crypto craze has cooled, at least for now.

For the past month, bitcoin’s price has stalled between US$8,500 (RM33,320) and US$11,300 – a minuscule range by its standards. And Internet searches for “bitcoin” have plunged, suggesting public interest has, too.

“The general public is now realising that this is not a risk-free, get-rich-quick, investment opportunity and general interest has since diminished,” says Lucas Nuzzi, a senior analyst at Digital Asset Research.

The lull this year shows just how quickly investment fads can come and go. Gone for now are the days when bitcoin dominated talk at holiday tables.

Stories lately look a lot like the ones in the back sections of financial papers – dry accounts of regulatory scrutiny, market structure and legal wrangling.

Online searches for “bitcoin” fell 82% from December highs, according to Google Trends. Tweets that mention the coin peaked Dec 7, at 155,600, and are now down to about 63,000, BitInfoCharts says.

And the number of bitcoin transactions is off 60% from its record on Dec 13, according to Blockchain.info.

December brought “Bitcoin Craze Propels Coinbase App to No 1 in Apple’s Store”. Now there’s “Bitcoin’s Wildest Days Are Over as Regulators Circle”. Indeed, bitcoin’s been in the news for all the wrong reasons lately.

Its price slumped on March 15 after Google said it would prohibit cryptocurrency ads, following Facebook’s move from January.

Major banks including JPMorgan and Bank of America banned crypto purchases on their credit cards, the Securities and Exchange Commission has stepped up cryptocurrency oversight and US Congress is holding hearings on how to treat the digital coins.

Earlier this month, Allianz Global Investors argued the coin’s “intrinsic value must be zero”.

“The story with bitcoin is pretty straightforward,” says Roger Kay, president of research firm Endpoint Technologies Associates Inc.

“It went up fast, and then came down even faster. Consumers who flocked to it late got burned. They are in the shadows now, licking their wounds. And others contemplating how to get rich quick are acutely aware that what goes up can come down, and maybe bitcoin isn’t the way to go about it.”

Of course, bitcoin’s obituary has been written countless times in its nine-year existence. In fact, 111 such stories appeared last year when it was on a tear, according to 99bitcoins.com. Almost 40 have been written so far this year, on track to top that level.

Still, just on March 15, people familiar with the matter said hedge fund billionaire Alan Howard made sizable personal investments in cryptocurrencies last year.

And even Allianz doesn’t think bitcoin is done for, not as long as the number of speculators and crypto true believers remains high. Coinbase says it still has more than 20 million customers, though it’s not clear how many have been active recently.

And this isn’t bitcoin’s first slump. It’s had at least three declines of 70% or more since 2010 only to come back with a vengeance and reach higher highs.

For now, though, boring might be the new normal as the decline in public interest
could leave bitcoin in what for it could be considered a tight range.

Remember, after a rally boosted its price 84-fold in 2013, it tumbled back the following week and held there until lifting off again last year.

Yes, the slump lasted more than three years.

Indonesian bitcoin investors set to outnumber stock participants

THE biggest Indonesian platform to buy and sell digital currency may soon have more members than the nation’s century-old stock exchange.

Indonesia Digital Asset Exchange, formerly known as Bitcoin.co.id, will have 1.5 million members buying and selling digital currencies such as bitcoin, ethereum and ripple by the end of the year, according to CEO Oscar Darmawan.

The platform, which began its operations in 2014, currently has 1.14 million investors, he said.

In contrast, Indonesia Stock Exchange which offers stocks, futures and options and exchange-traded funds, has only 1.18 million registered participants, according to data from the Indonesia Central Securities Depository.

Companies traded on the exchange have a combined market capitalisation of US$520 bil (RM2.03 tril), according to data compiled by Bloomberg.

“We are seeing almost 3,000 new members signing up every day,” says Darmawan. “Most people are trading in bitcoins though transactions in ethereum has increased significantly of late.”

While Bank Indonesia hasn’t banned exchanges from offering cryptocurrencies, it has asked investors to refrain from owning, selling or trading the tokens. The central bank doesn’t deem digital currencies as legal tender.

Indonesia Digital Asset Exchange is targeting daily volume to double from an average 100 bil rupiah (RM28.37 mil) a day currently, Darmawan said. The stock exchange in comparison recorded average daily transactions worth the equivalent of US$550 mil last year, according to data from the bourse.



This article first appeared in Focus Malaysia Issue 276.