Bitcoin. Picture: AFP
Bitcoin. Picture: AFP

"Hodlers" of bitcoin are stunned by its precipitous decline off its record high in December. No, that’s not a typo, "hodl" is a word in the bitcoin lexicon invented by an inebriated participant in a forum with a post titled, "I am hodling".

That was back in 2013, when the volatile cryptocurrency was still on the rise. If he hedl on to bitcoin until mid-December 2017, he would have made a killing: the price rose from US$100 back then to nearly $20,000 in December.

Bitcoin moved up from $930 in the one year leading up to that high. But, since the December peak, it has declined steeply to below $7,000 at the time of writing.

So what’s going on?

First, some perspective. Don’t shed any tears for long-term hodlers — the early adopters who got in before the big boom of late 2017.

They are still very much in the money and probably will be for some time.

If you must shed a tear, let it be for those who climbed the late 2017 hype wagon, which built as bitcoin turned in week after week of stellar performances based on very little other than more buyers entering the market. It was, for a time, a self-fulfilling prophecy that it would rise and rise and rise, the laws of economics be damned.

Even usually conservative financial houses such as Goldman Sachs announced that they would be opening bitcoin desks and futures on the Chicago Mercantile Exchange.

But then regulators stepped in, the Chinese took a dim view and the security of bitcoin was threatened by a series of thefts amounting to hundreds of millions of dollars. Those deep in the money pulled the plug, leaving the stunned newly arrived investors high and dry. With no profits to bank, they are the hodlers who are taking pain right now.

The drunken man who invented the term "hodl" went by the name "GameKyuubi". In his post he explained: "Why am I holding? I’ll tell you why. It’s because I’m a bad trader and I know I’m a bad trader."

Enough said.