Bitcoin's price has halved in the past six months, in what commentators are calling a "Bitcoin winter".
By Susan Edmunds of RNZ
The price of the cryptocurrency has fallen from a peak of about NZ$214,000 in October to less than NZ$110,000 this week.
Rupert Carlyon, founder of Koura Wealth, which offers a Bitcoin KiwiSaver fund, said there were a couple of reasons.
One was the listing of Elon Musk's SpaceX.
"It's the same retail investors that are into risk, into speculative asset classes that are going into SpaceX. It's all the Elon Musk hype machine which drives a lot of this type of thing."
He said another was that software company Strategy sold 32 Bitcoin and shook investor confidence. "They sold to fund some dividends on their preference shares, something they said they would never do.
"I think it's been one of the big questions raised over the last probably three to six months, why Bitcoin has not been on a tear given the inflation story… there's something clearly a bit funny happening in the market that no one's really sure of. This week we can bring it back to those two things, SpaceX and Strategy."
He said the amount sold by Strategy was not huge but it was notable because the company had said it never would.
Carlyon said he hoped that the fall was near the bottom.
"Historically it's fallen 60% to 70%. we had hoped that with ETFs, increased institutional adoption, that would mean the dip wouldn't be so far. We might not be a million miles away from the bottom, we might have a bit further to go."
He said investors in the Koura crypto fund were not concerned. "The fund over the last six months has been a net winner in terms of switches. More people keep on coming into it than leaving it."
Paul Quickenden, country manager for Swyftx NZ, agreed there were various forces at play, and Bitcoin was not acting as "digital gold" in an environment where there were inflation concerns.
He said, as well as the SpaceX IPO, the prospect of Anthropic and OpenAI listing would take capital out of other markets.
"Bitcoin is a very liquid market so [investors] are taking capital out of that and people are investing in the IPO…. We're seeing it in outflows from the Bitcoin ETFs, all that sort of stuff."
He said Bitcoin tended to fall every four years.
"Bitcoin goes though this moment, it just does. We're in that moment, it has a name - crypto winter. It's cyclical and it has been since inception. We're in the crypto winter phase. Invariably, it becomes a little unattractive, people chase returns… then when things get overpriced or they make food on IPOs, whatever is going to happen in the future, the capital recycles through."
He said it was possible many SpaceX investors would sell down their positions relatively quickly and "the shine will come up back on other assets like us and whatever else is suffering at the moment.
"Despite some foundational stuff being quite aligned for Bitcoin, high inflation, lots of uncertainty… other things are diverting people's attention."
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