SAN FRANCISCO — In December, bitcoin seemed like the next big thing. One bitcoin was nearing $20,000, and financial journalists were starting to seriously consider whether it could replace safe-space investments like gold. Companies were sprouting up to sell the cryptocurrency to the general public.

But it’s been pretty much downhill since. One bitcoin is now worth a little less than $6,500, and public interest has waned. Such is life for bitcoin proponents.

“I’ve seen bitcoin drop from $20 to $2 and $1,200 to $250,” said Jeremy Gardner, managing partner of the investment firm Ausum Ventures and the proprietor of San Francisco’s Crypto Castle, a living space for people working in cryptocurrency. “Hyper-growth followed by a heavy correction isn’t new.”

Two weeks ago bitcoin jumped above $8,000 and everyone was excited that the worst of the bear market was over.



Today, bticoin is back at $6,300, near the lows of the year.



Here's the year-to-date chart. Lower highs and lower lows all year, via @coindesk pic.twitter.com/XUwlv6q0fB — Steven Russolillo (@srussolillo) August 9, 2018

Nick Colas, co-founder of the market analysis firm DataTrek Research, has been covering bitcoin since 2013. He said the volatility over the past few months should come as “no surprise” for a digital currency that ebbs and flows based only on how people feel about it.

“The issue with bitcoin is the price is driven 100 percent by market psychology,” Colas said. “It is still a new technology and in the early days of adoption, so there isn’t a lot aside from public confidence to underpin its value.”

While the price of bitcoin remains its most visible trait, people who work in the cryptocurrency world are focused on other aspects — in particular whether U.S. regulators could soon open doors that would make it easier to buy and sell assets based off bitcoin.

Colas said bitcoin’s recent decline is due to speculation over whether the Securities & Exchange Commission would allow a bitcoin exchange-traded fund, which would allow investors to track the price of bitcoin without having to own the cryptocurrency. Such a tool could make bitcoin investment available to the masses.

Bitcoin rode that wave and then fell at the end of July after the SEC denied an application from the Winklevoss twins, who are best known for claiming that Mark Zuckerberg stole their idea to create Facebook and settling with him for $65 million.

“The rhythm of this security is, rumors circulate, there are new financial tools coming to trade it, and then there isn’t, then it goes down,” Colas said. “Last year, the futures exchange in Chicago made bitcoin contracts and when no one wanted to trade, air came out of the bubble.”

The ups and downs of bitcoin have led to swings in overall public interest that closely mirrored bitcoin's price fluctuations, as the Google Trends chart of search interest below shows.

A Google Trends chart shows a spike in Bitcoin web searches. Google

Some bitcoin believers see the price as a distraction from the cryptocurrency’s real potential — transforming the global financial industry and much of the economy itself. Bitcoin believers who bought into the cryptocurrency long before its rise and fall said they believe the value is in the long-term potential of blockchain, which is the underlying concept on which bitcoin is built. A blockchain is a digital, decentralized public ledger that allows people to seamlessly trade digital currencies without having to go through a bank, essentially guaranteeing that assets can been transferred securely.

“Bitcoin and crypto-assets matter because they provide a sovereign digital assets class in a growingly Orwellian world,” Gardner said.

Ran Neu-Ner, the host of CNBC’s “Cryptotrader” and the founder of the blockchain investment firm OnChain Capital, said the current price of bitcoin isn’t surprising and that it might not have reached its bottom yet — but added that he’s still a believer in its future.

“We are dealing with a very young but promising technology,” Neu-Ner said.

Bitcoin and other cryptocurrencies aren’t for anyone looking to “make a quick buck and drive a Lamborghini out of the showroom,” he said.

Those who bought a significant amount of bitcoin last year and are worried about its value “should re-evaluate and decide whether you believe in the long-term value of this technology,” he said. “There’s a saying in the bitcoin community — ‘hodl’ — meaning hold. If you still haven’t bought into it, then now is the perfect time to sell.”

Neu-Ner suggested that people interested in bitcoin buy even a small amount to “teach you the basics of how amazing this technology is.”

“Once you understand the beauty of an asset that can be transferred peer to peer without any friction and the ability to create smart contracts, then you have probably gone through Cryptocurrency 101.”

As for Neu-Ner, who goes by CryptoManRan, he said he has been happily buying more bitcoin.

“This market is completely oversold, but we can expect a recovery,” he said. “If we’re not at the bottom now, then maybe one more down wave. But for me as an investor, I am starting to buy now.”