Smoke clears and bitcoin still stands
For most of last year, bitcoin grabbed the attention of financial markets as a new global currency and a threat to the hegemony of central bankers and the world's reserve currency, the US dollar.
Today, excitement over the digital currency has dissipated in line with its 80% plunge from the high it reached last December.
But despite its travails, the digital currency still has many supporters who laud it as the future of financial technology.
"What we've seen in the past year is a correction of that incredible rise at the end of 2017 and the market is trying to find the appropriate value of this new asset class that has no comparison," said Farzam Ehsani, co-founder and CEO of digital trading platform VALR.com.
"But I think we're still not out of the volatility. I think there will be a lot more volatility," he said.
The currency, of which South Africans were huge adopters, has dropped from its $19,783.21 peak to $3,300.03 (just under R50,000), the lowest this week.
With increasing volatility and uncertainty, bitcoin is being undervalued so much that it started to flirt with its historical low levels in November, when it was sold off at a high rate.
The coin's price at current levels is a correction from the price spike in December 2017, said Ehsani, who used to be the lead of blockchain at RMB.
"There were a lot of speculators; there was a lot of silly money coming into the space because of the fear of missing out," he said.
Investors in the cryptocurrency have come and gone as they realise it's no way to get rich quick and that it's an investment space with no guarantees.
Marius Reitz, country manager at bitcoin exchange Luno, said the price is sitting in a relatively stable price band given bitcoin's trend in price correction.
"These corrections happen frequently . the current price is fairly normal," he said.
According to Reitz, macroeconomic indicators point to a growing industry in the cryptocurrency market and the fast adoption of digital money is an indicator that "it is here to stay".
He said: "I think there's a long-term future for cryptocurrency."
Reitz said the volatile nature of the currency makes it difficult to predict its future behaviour. "To comment on the bitcoin price is like taking a shot in the dark, you just don't really know."
Ehsani added: "If someone wants to come into the market they should put in enough to make them pay attention but not so much that it would hurt them if they lost it."
Barry Dumas, a trader at Purple Group, said using bitcoin as an acceptable form of payment may be worth the consideration of regulators. "For me, blockchain technology is where it's at and it should have a wider adoption to evolve to streamline payments, transfers et cetera. But in saying this there might still be a need for regulation to the extent that transaction costs and transparency can be of concern moving forward," he said.
The South African Reserve Bank, which has recently established a financial technology unit, is in the process of drawing up a regulatory framework to provide policy on how cryptocurrencies should operate in the country.