Bitcoin Hit Its All-Time High in 2017. Here Comes New Competition. – Barron’s

Illustration by Elias Stein

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Two years ago last week, Bitcoin peaked at $19,783, after starting 2017 at about $1,000. Since then, prices have fluctuated wildly, falling 73% in 2018 and rising 85% this yearbut they have not come close to retesting previous highs. Recently, Bitcoin was trading near $7,000.

An investor who bought early in 2017 would still be up more than 500%. But thats not the whole story. Dan Wiener, chairman of Adviser Investments and founder of the Independent Adviser for Vanguard Investors, analyzed Bitcoin price movements since the start of 2017 and found that the average five-day rolling return was 1.5%. But the range of five-day gains and losses was enormous, with a high of 47% and a low of minus 29%. And investors lost money 45% of the time when they held Bitcoin for 10 days, he calculated.

Beyond the price action, the biggest change since 2017 is Bitcoins rising competition. Two years ago, the market was awash in initial coin offerings for currencies expected to challenge Bitcoins dominance. But Bitcoin still accounts for 67% of the market value of cryptocurrencies, according to Coinmarketcap.com. Bitcoins real competition now comes from companies looking to use blockchain technology to create currencies, and governments that want to produce digital coins backed by their treasuries. Will the dominant coin be decentralized like Bitcoin, corporate-backed, or government-controlled?

Facebooks Libra project has run into regulatory issues, but could launch as soon as next year. China has been working on digital currencies since 2014 and has reportedly accelerated efforts this year.

The Census Bureau reports new-home sales data for November. Consensus estimates are for a seasonally adjusted annual rate of 730,000 new homes sold, roughly even with Octobers figure. That estimate would be about an 11% increase from November 2018s 657,000 rate. In October, the average price for a new house was $383,300 while the median price was $316,700.

The Federal Reserve Bank of Chicago releases its National Activity Index for November. Economists forecast a negative 0.1 reading, similar to the October data. The index has had a negative reading every month this year except for June and August, after having three negative reading in 2018. This indicates that the economy, while still growing, is decelerating.

The Census Bureau releases its Durable Goods report for November. New orders for durable manufactured goods are expected to jump 1.6% after a 0.5% rise in October. Excluding transportation, new orders are seen edging up 0.2%. This compares with a 0.5% gain in October, as well.

Trading ends early, at 1 p.m., on the New York Stock Exchange and Nasdaq Composite for Christmas Eve. The bond market closes at 2 p.m.

The Bank of Japan releases minutes from its monetary-policy meeting at the end of October.

The Federal Reserve Bank of Richmond releases its Fifth District Survey of Manufacturing for December. Expectations are for a 3.0 reading, up from Novembers minus 1.

Markets all over the world, including in the U.S., are closed in observance of Christmas Day.

China hosts a trilateral summit with Japan and South Korea in the southern city of Chengdu. The two-day confab convenes on Dec. 24. and concludes on Dec. 25. Chinese Premier Li Keqiang, Japanese Prime Minister Shinzo Abe, and South Korean President Moon Jae-in are scheduled to attend. The denuclearization of North Korea and ongoing trade war between Japan and South Korea will be among the topics for discussion. In August, Japan removed South Korea from its list of trusted trade partners. Seoul followed suit the next month. The root of the disagreement is over Japans compensation of forced Korean laborers during World War II.

Many bourses, including those in Canada, England, and Hong Kong, are closed in observance of Boxing Day.

The Department of Labor reports initial jobless claims for the week ending on Dec. 21. The four-week moving average of claims is 225,500.

Pivotal Software holds a special shareholder meeting in San Francisco to seek approval for a proposed merger with VMware. In August, VMware announced a cash and stock offer for Pivotal Software valued at $2.7 billion.

The U.S. Energy Information Administration releases its Petroleum Status report for the week ending on Dec. 20.

Write to Avi Salzman at avi.salzman@barrons.com