Scary, and Boring, Times for Bitcoin's 10th Birthday

(Bloomberg) -- It’s a frightening 10th birthday for Bitcoin.

The original cryptocurrency finds itself mired in a steady decline, finishing down for a third consecutive month on the anniversary of its creation. Bitcoin’s value has decreased by about 18 percent since the beginning of August and more than 50 percent since the start of the year. This is happening despite an extended period of low volatility and a decline in speculative investments.

Scary, and Boring, Times for Bitcoin's 10th Birthday

Bitcoin was born on Halloween 2008 with the publication of a research paper by someone who went by Satoshi Nakamoto titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” Designed as a method of exchange that can be sent electronically between users around the world, it did not have a centralized control network. Instead, Bitcoin is run by a network of decentralized computers that keep track of all transactions on a digital ledger called a blockchain. Its birth started a digital currencies revolution and has brought about the emergence of more than 1,600 other coins. And despite the hullabaloo, Nakamoto’s identity has stayed a mystery.

But Bitcoin, and other digital tokens, have been burdened by regulatory scrutiny of trading platforms. Regulators have voiced concern over money laundering and customer protection tied to digital currency transactions. At the same time, adaptation has been slow.

"Currently the so-called cryptocurrency market is not what the Satoshi white paper envisioned it to be," said Mike McGlone, a Bloomberg Intelligence analyst. "Hopefully we will get there, but the current plethora of speculative cryptographic assets remains too volatile, with most of the supply and demand indicators pointing to continued declining prices.”

Bitcoin’s volatility has plunged to its lowest level since late 2016, a few months before a rally that saw its value increase to an all-time high of $19,511 in December 2017. It is trading around $6,300 today.

Scary, and Boring, Times for Bitcoin's 10th Birthday

Bitcoin’s muted volatility is a result of maturity within the asset class and a gained comfort of valuation -- not so much a lack of interest from market participants, said David Tawil, co-founder and president of Maglan Capital. He pointed to the latest development from Fidelity Investments, which recently announced a cryptocurrency business that serves Wall Street clients.

"There is a lot of development going on, relating to infrastructure and direct investment,” Tawil said. “The fruits of the those labors will begin to manifest soon.”

©2018 Bloomberg L.P.