Down More than 70% in 2018, Bitcoin Closes It's Worst Year on Record

Of course, more downside is always possible, if not likely, but at least the year in which bitcoin prices dropped more than 80 percent and the broarder market lost nearly $700 billion of total capitalization is over.

By now, you're probably well aware the world's premier cryptocurrency, bitcoin, catapulted more than 2,500 percent from its 2017 low to reach a new high of almost $20,000 by December of that year.

Coincidentally, Nov. 14 was the day before one of the world's largest crypto-networks, bitcoin cash, underwent a divisive hard fork, which many suspect provided enough uncertainty in the broader market to catalyze bitcoin's break below $6,000.

Now having closed the year at the price of $3,747, 2018 will go in the record books as bitcoin's worst performing 12-month stretch ever in terms of price.

The leading cryptocurrency's 2018 performance of a more than 70-percent depreciation from its opening price of $13,062 is considerably worse than the previous record holder, 2014, the year when its price fell roughly 55 percent open to close, according to CoinDesk's pricing data.

From Satoshi Capital Research revealed over $2 trillion worth of bitcoin was traded in 2018, which as of Dec. 1 marked a 61 percent increase from the previous year.

As can be seen in the above chart, bitcoin's NVT ratio was well above 100 for almost all of 2018 and even reached its highest level since 2011 above 200, confirming the market was significantly overvalued and a drop in price and network value was highly likely.

Now at the year end, bitcoin has witnessed a near 80 percent drop in network value, falling from $280 billion to $56 billion.

2018 was a historically bad year for bitcoin if solely price action and network value are being taken into account.

All in all, 2019 will be an interesting year for bitcoin as valuations deflate and continue to align with fundamental principles.