This month for the world’s largest cryptocurrency has been the worst December since 2013.Bitcoin is ringing out a banner year with a rocky finish.
The largest cryptocurrency by market value is on pace to close out December with a 19% drop, its largest monthly loss since May. That’s also its worst December since 2013. And its 59% advance in 2021 marks its smallest gain for an up year since 2015, when it advanced 36%. The coin on Friday fell as much as 3.5% to trade at $45,658.That it had a breakout year, though, is now settled debate after Bitcoin and the wider crypto world spent 2021 pushing further into the mainstream and capturing more attention from finance professionals and the public at large. Those watching Bitcoin’s daily gyrations say all of it is par for the course — the coin is famous for its volatility and this year proved just as choppy as any other.
“We’re seeing a little more volatility,” Chris Gaffney, president of world markets at TIAA Bank, said in an interview. “It’s a speculative asset.”
Bitcoin started 2021 with a bang, quickly notching new highs as more investors — especially big-name Wall Street institutions — became interested in it as a speculative asset or as a hedge against rising prices. Other positive developments, including the launch of the first U.S. exchange-traded fund tracking Bitcoin futures, also helped propel it higher over the year. Globally, more than $20 billion was invested in crypto exchange-traded products through November, a record, according to ETFGI, a research and consultancy firm. Assets increased roughly 550% year to date, up from $3.1 billion at the end of last year, the firm said in a report.
“What lifted Bitcoin above $20,000 was this excitement factor that, ‘Oh my God, it’s not just a bunch of kids. It’s real. Institutions are going to make strategic allocations in Bitcoin because it’s a limited supply, it’s only going to go higher,’” said Michael Purves, chief executive and founder of Tallbacken Capital Advisors. “The next stage of this sort of awkward adolescence of Bitcoin is going to require something more than that.”
Bitcoin has had a rough time since hitting an all-time high of near $69,000 in early November. Partly, analysts say, it’s being buffeted by concerns over greater regulatory scrutiny around the world. But it’s also losing dominance to other lesser-known upstarts that have gained in popularity as the crypto ecosystem expanded this year. Among the biggest cryptocurrencies, Binance Coin posted the best return, adding roughly 1,300% in 2021.