Bitcoin crash gives way to steady growth
The price of bitcoin has crashed in early 2019 but some experts in the field argue that the news is not all bad, with the future for cryptocurrencies looking fairly strong.
At the end of January 2019, the price of bitcoin was US$3525, having slumped from a peak of over US$19,000 in late 2017. This is not the first crash in a market known for its volatility, and in previous downswings the price has eventually settled at a point that shows a long-term upwards trend. For example, at the start of 2017 the price was about US$975.The general feeling in the market is that much of the massive movement seen in the past two years was driven by speculative activity in the cryptocurrency sector.“There was certainly a run-up of strong speculative interest in bitcoin in late 2017, which has fortunately now dissipated,” says Jason Potts, RMIT University professor of economics and director of the university’s Blockchain Innovation Hub.“The crash is certainly alarming for those who bought in during the bubble but it has also served to flush out purely speculative traders. It was a good bubble to have, as it brought a lot of attention to the sector as a whole. Real investment by developers in building product and writing code has continued apace through 2018 and is deeper than ever now.”Potts believes that the bitcoin market will be more stable in 2019, but he emphasises that crypto-assets are an early-stage technology, so a level of volatility can be expected for some years to come.