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Last winter, while the bitcoin rose to $ 10,000, Mike Novogratz, a hedge-fund-manager-turned-crypto-investor, proclaimed he could "easily" reach $ 40,000. Then, when bitcoin beat $ 11,000, John McAfee's anti-virus software boldly predicted 1 million bitcoins by 2020.
For an astonishing moment, when Bitcoin exceeded $ 20,000 per currency in mid-December 2017, Novogratz and McAfee seemed prophetic. But while $ 1 million bitcoins by 2020 is still theoretically possible, the last year has cast serious doubts on their prognostication capabilities.
The price of Bitcoin has been steadily declining since May and the cryptocurrency is now under $ 4000, a decline of 80% from its peak. Its market capitalization has decreased from $ 327 billion to $ 66 billion in the last 12 months. Put simply, it has gone from Exxon Mobil's size to FedEx size.
If 2018 was the year when bitcoin should have made its way to widespread adoption, the price drop is just a sign that bitcoin mainstreaming has not happened.
Besides the bitcoin, it has been a painful year for the loyal encrypted. From January 1, the collective market capitalization for all cryptocurrencies fell from $ 822 to $ 130 billion. This includes alternative cryptocurrencies and scam projects, as well as bitcoins offshoot, so it may not be the best representation of the bitcoin ecosystem.
The fundamentals of the Bitcoin network also illustrate the decline of 2018.
According to BitInfoCharts, the number of daily active bitcoin portfolio addresses decreased from 1.1 million in December 2017 to 450K. And the network has lost about 1,500 nodes – the computers that connect to the bitcoin network – a 12% drop compared to last year, according to Bitnodes.
Mining revenues, money generated through network security compensation and the number of confirmed transactions per day have declined, suggesting that fewer people have used bitcoins this year than last year. And for Google Trends, in 2018, bitcoin's global popularity score dropped from 100 to 18, another index of its overwhelming descent.
Also in 2018, the US Securities and Exchange Commission did not approve a fund traded on the bitcoin exchange. The long-awaited financial product would allow investors to own bitcoins without having to buy them on their own. An ETF could have brought a new wave of speculators and provided tacit approval of the cryptocurrency as an asset class, but the SEC has passed due to continuing concerns about manipulation in the bitcoin spot market.
In the meantime, existing financial products, like bitcoin futures, have not picked up much interest. "Institutional players have stayed on the edge of the bitcoin, and until they are, futures contracts are unlikely to generate large volumes," said Bloigberg Craig Pirrong, a professor of finance at the University of Houston, in October.
In 2018, bitcoin's corporate acceptance was also a mixture. Microsoft resumed its bitcoin payment option in January, and Dish Network even added bitcoin liquidity – a bitcoin offshoot – as a payment option for the subscription television service. But this year, Expedia and Reddit have also dropped support for bitcoin payments, and Starbucks' wider adoption turned out to be a caffeine advertising.
Finally, as companies focused on cryptography, such as ConsenSys and Bitmain, lay off employees, it's another reminder that the price of bitcoins last year may have been just a blip on the radar. The year 2018 was to be the turn of bitcoin victory. Instead, it looks more like a goodbye tour.
