Bitcoin on Track For 4th Annual Decline Despite Crypto Adoption

Bitcoin is on pace for the fourth annual loss in the largest cryptocurrency’s history.

As Bloomberg News noted in a report on the downturn Wednesday (Dec. 17), this is the first yearly decline that is not accompanied by an industry meltdown or high-profile scandal.

This week, the report added, began with a sharp selloff Monday (Dec. 15), with bitcoin now down 7% for the year, trading at around $87,100 at noon in Singapore on Wednesday.

This decline is not as severe as the last three down years, Bloomberg continued, but is happening in a greatly different environment. Since the crypto winter of 2022, institutional adoption has grown, regulation has advanced, and the White House has embraced the industry.

Now, the report said, crypto advocates are facing a downturn coming sharply on the heels of bitcoin’s record high of more than $126,000 in early October.

Volumes are low, investors are shunning bitcoin ETFs and derivatives markets aren’t confident in a rebound. Strategy, the high profile bitcoin buyer, has continued its pattern of snatching up huge swaths of the coin, but that hasn’t been enough.

“Most are surprised by the lack of follow-through despite so many positive catalysts,” Pratik Kala, a portfolio manager at hedge fund Apollo Crypto, told Bloomberg.

In other crypto news, PYMNTS wrote earlier this week about a shift by the Securities and Exchange Commission (SEC) from a stance of enforcement to “one of education and enablement” when it comes to digital assets.

The regulator last week issued an investor bulletin titled “Crypto Asset Custody Basics for Retail Investors,” an explainer of how digital assets are held, accessed and lost.

“For retail investors, the most consequential risk in crypto ownership is not price swings but control,” PYMNTS wrote. “Specifically, it is who controls the private keys that grant access to digital assets. Lose the keys, and the assets are effectively gone. Entrust them to someone else, and a new set of risks emerges.”

On the enablement side, the SEC issued a no-action letter to the Depository Trust Company (DTC), giving it the greenlight to pilot a blockchain-based system for tokenized securities entitlements, a statement that characterized tokenization as a “trending” but regulated evolution of market structure.

“By experimenting with tokenized entitlements, the DTC is exploring whether distributed ledgers can improve reconciliation, transparency and operational efficiency without dismantling the roles of transfer agents, clearinghouses or custodians,” PYMNTS wrote. “This approach also reflects a growing consensus among large financial institutions that the future of tokenization is likely to be permissioned, not permissionless, and integrated, not parallel, to existing systems.”