Bitcoin took a brutal beating in 2018. But a slow recovery is expected by many experts. The digital currency deflated in 2018 after making millionaires of early adopters. Bitcoin dropped 37 percent in November alone, wiping $70 billion off of cryptocurrencies’ global market capitalization. The pain isn’t over, experts say, predicting bitcoin may sink another 75 percent—though they defend the pioneering token’s long-term viability.
A single bitcoin is worth slightly more than $4,000. Academics and industry experts believe it could sink as low as $1,000 before stabilizing. Federal investigators are probing whether fraud fueled a bubble, and some investors are clamoring for regulation. The big plunge in bitcoin’s price has has drawn comparisons with the Nasdaq’s sharp fall in 2000 and the failure of many cryptocurrencies has been likened to some of the companies that crashed during the dotcom boom. Some of the recent bearish sentiment came after two South Korean cryptocurrency exchanges were hacked.
“Over the last year, bitcoin has traded like a high-risk, high-return asset class,” said Lamont Black, a former economist at the Federal Reserve Board of Governors and a finance professor at DePaul University.
“Investors drove up the price of bitcoin in 2017 based on speculation of future returns. Now bitcoin has returned closer to historic levels,” Black said. “The price of bitcoin in early 2017 was only $1,000. I don’t think it would be unreasonable to return to that level before stabilizing.”
This sentiment is echoed by cryptocurrency traders and tech industry experts. “Bitcoin and the underlying blockchain technology promote an uncensored network where all can participate with equal access, which provides tremendous value, regardless of the impact short-term speculators have had on the market,” said Casey Botticello, President of the Cryptocurrency Alliance, a Super PAC dedicated to raising awareness about cryptocurrencies and blockchain technology.
“If bitcoin drops below $1,000, it would be very attractive to many investors,” he added.
Black, the former Federal Reserve economist and professor, said he also believes bitcoin will be around for the long term, blaming the surge on a “classic bubble” and expressing doubt that Bitcoin will “crash” as many speculators have suggested.
“My long-term outlook for bitcoin remains positive but I don’t expect a recurrence of exponential growth. I think bitcoin has a role to play in the ‘blockchain economy’ of the future,” he said. “As additional cryptocurrencies and other blockchain applications become ‘legitimate,’ then bitcoin could become a relatively stable foundation for transferring value across these various investments.”