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9m per cent leap in a decade stuns Bitcoin sceptics

New York

IF IN the throes of this bull market's earliest stages of recovery someone told you to forgo stocks, forget commodities, renounce fixed-income assets and buy an unknown digital token, the first of its kind, and watch it grow beyond your wildest dreams, you'd call them crazy, right?

Emerging out of the ashes of the financial crisis, Bitcoin was created as a bypass to the banks and government agencies mired in Wall Street's greatest calamity in decades. At first, it was slow to break through, muddied by a slew of scandals: fraud, thefts and scams that turned away many and brought closer regulatory scrutiny. But once it burst into the mainstream, it proved to be the decade's best-performing asset.

The largest digital token, trading around US$7,200, has posted gains of more than 9,000,000 per cent since July 2010, according to data compiled by Bloomberg.

"Bitcoin really captured that wild technology enthusiasm that 'this time is different'," said Peter Atwater, the president of Financial Insyghts and an adjunct professor at William & Mary in Williamsburg, Virginia.

The performance over the past 10 years, even with its huge run-up and subsequent mega-crash, leaves all others in the dust. It's a massive windfall for those who held on through its ups and downs, even as it continues to provide fodder for get-rich-quick schemes. For some, the never-ending fantasy of continually hitting that payoff still helps to keep Bitcoin's momentum going.

Nothing else comes even close to beating it. The S&P 500 merely tripled in that period. An index that tracks world markets has more than doubled. Gold is up 25 per cent. Some of the best-performing stocks in the Russell 3000 - including Exact Sciences Corp and Intelligent Systems Corp - are each up about 3,000 per cent. Those gains pale in comparison to the finance world's latest - and one of its most controversial - marvels.

Partly, the monster return is a reflection of the calculus behind Bitcoin's jumping-off point: the token wasn't worth anything when some-one named Satoshi Nakamoto launched it on Halloween 2008. Many of those who got in early stayed faithful, watching as it made its way through a boom and bust cycle unrivalled by almost anything else over the last decade.

At the start of 2017, Bitcoin jumped above US$1,000. By mid-summer, it had more than doubled. Insanity was unleashed. By year-end, it hovered above US$14,000. But as swiftly as it ran up, it fell even faster. By the end of 2018, Bitcoin barely budged above US$3,000. Yet shortly after its crash, it embarked on another huge rally, this time reaching as high as US$13,800 in the summer of 2019.

In the more immediate term, some speculators forecast 2020 might be less fraught with volatility given its upcoming halving, whereby the number of coins awarded to so-called miners who process transactions is cut by 50 per cent. That's set to happen in May 2020. The coin's previous cut, about four years ago, coincided with a run-up in its price, pushing many crypto-evangelists to believe in a repeat. BLOOMBERG