The virtual currency barrelled to new highs to rise more than 400% over the past year, before promptly sliding some 20% and then settling around $36,000.
When it started life in 2009 as open-source software, bitcoin was essentially worth zero — though within a year it had reached the heady heights of eight cents.
At today’s market rates, bloated by a surge in institutional demand, the digital unit’s market capitalisation is worth some $670 billion with myriad other crypto coins such as ethereum lifting the sector nominally close to the trillion mark.
Although that’s small potatoes compared to the $68 trillion or so swilling around world stock markets, it is nonetheless the sort of financial territory staked out by Wall Street tech royalty such as Google, Apple or Tesla.
One tech site, AssetDash.com, notes that bitcoin is currently worth around as much as Facebook and a little more than Chinese e-retail giant Alibaba.
Although deep-pocketed investors have recently become enthusiasts, crypto was in its early days the preserve of geeky amateur investors.
It is the latter who have mainly suffered as an estimated four million of the roughly 19 million bitcoin units currently in circulation have been lost.
“Lost” does not mean the coins have fallen down the back of the sofa or through a hole in a trouser pocket: they have been electronically zapped from the record, often because their owner has forgotten a password to coins hoarded on a USB stick.
One US developer mislaid his password after storing 7,002 bitcoins on one such flash drive, forcing him to wave goodbye, on paper (or rather, the trading screen), to around $280 million.
This week, Welshman James Howells desperately offered his local authority a quarter of his fortune to dig up a landfill site where he believes a hard drive he accidentally tossed away – and which has since soared in value to around $270 million – is buried. The council refused, citing the cost and logistical restrictions.
According to analysts at JP Morgan, bitcoin may be highly volatile but could go as high as $146,000 per unit, putting it in competition with gold as an asset class in terms of private sector investment.
That volatility, as well as the unregulated and decentralised nature of the bitcoin beast, are key reasons why many seasoned financial observers are scared off — as well as the risk of “losing” their stash.
“Most of the lost bitcoins were acquired in the early days,” said Philip Gradwell, economist with Chainalysis.
Gradwell said that around one in five bitcoins in circulation today have not budged from their location in five years – since days when the unit was worth not much more than $100.
“One or two million of those belong to Satoshi himself,” added Gradwell, referring to the creator of the coin, whose identity remains unknown.
He added that the bulk of investors are not day-to-day traders, but people making a long-term punt – and he estimates that the spectacular price boom of recent weeks has involved only around five millions units.
Patrick Heusser, head of trading at Swiss trader Crypto Broker, said that following the trading volumes of a variety of cryptocurrencies, rather than just bitcoin, would give a better idea of how the market is faring.
“Ethereum has a lot of activity on the chain, but on the litecoin side there is almost nothing going on,” said Heusser, with the former valued at some $138 billion currently, and the latter at $10 billion.
Heusser suggested the rises have been largely a bitcoin slipstream effect, and he cautioned against drawing parallels with gold.
“To be honest I don’t believe that it is a very powerful or insightful metric inside what’s going on in the crypto market,” Heusser concluded.
After years of experience on traditional currency markets, he judged that it was early days for the crypto equivalent.
“We’re still a small fish,” he said.
Two IPOs to hit market this week, eye over Rs 5,800 cr
NEW DELHI: Two companies — Indian Railway Finance Corporation and Sequoia Capital-backed Indigo Paints — are set to hit the market with their initial share-sale offers this week to raise an estimated over Rs 5,800 crore.
The companies are expecting to benefit from an equity market, which is flush with liquidity and has seen a sharp increase in new retail investors.
The three-day initial share-sale of Indian Railway Finance Corporation (IRFC) would be open for public subscription during January 18-20, while the IPO of Indigo Paints would open on January 20 and conclude on January 22.
IRFC IPO comprises up to 178.20 crore shares, comprising a fresh issue of up to 118.80 crore and offer-for-sale of up to 59.40 crore shares by the government.
The price band has been fixed in the range of Rs 25-26 per equity share and at the upper end of the price band, the IPO is expected to fetch Rs 4,633.4 crore.
On Friday, the company raised Rs 1,390 crore from anchor investors.
IRFC, set up in 1986, is a dedicated financing arm of the Indian Railways for mobilising funds from domestic as well as overseas markets. Its primary objective is to meet the predominant portion of “extra budgetary resources” requirement of the Indian Railways through market borrowings at the most competitive rates and terms.
The Union Cabinet had in April 2017, approved listing of five railway companies. Four of them — IRCON International Ltd, RITES Ltd, Rail Vikas Nigam Ltd and Indian Railway Catering and Tourism Corp — have been listed.
Meanwhile, the IPO of Indigo Paints comprises fresh issuance of stocks aggregating to Rs 300 crore and an offer-for-sale of up to 58,40,000 equity shares by private equity firm Sequoia Capital, through its two funds — SCI Investments IV and SCI Investments V — and promoter Hemant Jalan.
The price band has been set at Rs 1,488-1,490 a share for its initial share-sale. The public issue would gather Rs 1,170.16 crore at the upper end of the price band.
Half of the issue is reserved for qualified institutional buyers, 35 per cent for retail investors, 15 per cent for non-institutional bidders and there is a reservation of up to 70,000 equity shares for subscription for employees, who will get a discount of Rs 148 per equity share to the offer price.
Proceeds from the fresh issuance of shares would be used for expansion of the existing manufacturing facility at Pudukkottai in Tamil Nadu, for purchasing of tinting machines and gyro shakers and repayment/prepayment of borrowings.
Kotak Mahindra Capital Company, Edelweiss Financial Services and ICICI Securities are the book running lead managers to the issue.
The Pune-based company manufactures a range of decorative paints and has an extensive distribution network across the country. As of September 30, 2020, the company has three manufacturing facilities located in Rajasthan, Kerala and Tamil Nadu.
In 2020, 15 main-board IPOs raised a little over Rs 26,600 crore, which was much higher than Rs 12,362 crore garnered by 16 companies in 2019.