After the initial price collapse that saw Bitcoin shed more than half of its value from its December 2017 high, the cryptocurrency began a slow recovery and eventually settled at between $10,000 and $12,000.
As this happened, the gloomy predictions about Bitcoin’s demise abated. However, Harvard professor and economist Kenneth Rogoff doesn’t believe this calm will last much longer.
“I think bitcoin will be worth a tiny fraction of what it is now if we're headed out 10 years from now ... I would see $100 as being a lot more likely than $100,000 ten years from now,” he said during a CNBC interview.
This statement is based on his assertion that Bitcoin is rarely used as a transaction vehicle, “if you take away the possibility of money laundering and tax evasion.”
A survey conducted last November revealed that 67% of American Bitcoin investors haven’t sold their holdings at all.
The number of people holding onto their Bitcoin in hopes of a price increase has given the currency a reputation for being a speculative asset as opposed to being a means of exchange.
However, currencies throughout history have been used as stores of value, which is in itself a bet that this value will increase or remain stable until the people holding a given currency decide to spend it on things they need.
This isn’t to say that Rogoff is entirely wrong in his assessment: a large portion of the Bitcoin ecosystem relies on speculative activity.
He believes that regulation might actually be the biggest factor to affect the price of the superstar cryptocurrency.
“It really needs to be global regulation. Even if the U.S. cracks down on it and China cracks down, but Japan doesn't, people will be able to still launder money through Japan,” Rogoff said.
Still, it didn’t take regulation on a global scale to send the Bitcoin price plummeting.
Just the mere suggestion that South Korea — one of the world’s largest Bitcoin markets — might ban exchanges from operating in the country unleashed chaos and hammered the total cryptocurrency market capitalization.
This is perhaps something people should consider before dumping all personal savings into Bitcoin, as Millennials are apparently wont to do.