Well, the stage was set and the ground was ready for that breakthrough moment when cryptocurrencies could have finally placed themselves as a viable alternative to traditional money. The crypto market was witnessing a bull run, Bitcoin was riding high on the sensational wave in the latter part of 2017, sentiments were high and there was a general sense of euphoria surrounding cryptocurrencies. But now it all seems like a distant mirage and things never materialized.
The markets took a downward turn and the "rally" everyone was talking about never materialized. There have been many opportunities for cryptocurrencies led by Bitcoin to stage a comeback, but the fact remains that Bitcoin and others have failed to bounce back, which according to one researcher is just the start of a bad phase for cryptocurrencies and there can be more bad news in the offing.
In an extensive paper dedicated to the future of cryptocurrencies, Juniper Research Ltd. presents a bleak view of the market over the coming months and years. The financial analysis group states that the entire Bitcoin and digital asset space appears to be heading towards an “implosion”.
"If Bitcoin cannot make gains in such favorable circumstances, then it is unlikely to prosper as and when these issues are resolved. We feel that the industry is on the brink of an implosion," says U.K.-based Juniper researcher Windsor Holden in a new study published on Tuesday.
The group also looks at important technical, regulatory, and social issues facing Bitcoin and other cryptocurrencies. Other reasons which contribute to this damning forecast include shrinking transaction volumes over the course of 2018, as well as a sharp decline in the value of transactions.
Decline in transactions a concern
Commenting on the decline in transactions, the whitepaper says:
“The value of transactions has fallen away sharply since the start of the year. During Q1 2018, cryptocurrency transactions totaled just over $1.4 trillion, compared with less than $1.7 trillion for 2017 as a whole. However, by Q2 2018, transaction values had plummeted by 75%, with total market capitalization falling to just under $355 billion. Meanwhile, based on activity during the first half of Q3, Juniper estimates a further 47% quarter-on-quarter drop in transaction values in that quarter.”
All these details paint a rather bleak future for Bitcoin and its allies. The research also points to the fact that the ensuing geo-politic reasons should have acted as a platform for pronounced movement of capital from traditional stronghold to cryptocurrencies, but that’s not happening and this doesn’t’ bode well for the future.
It's evangelists vs skeptics
While there is no shortage of Bitcoin evangelists like John McAfee, Mike Novogratz, Tim Draper and others who believe that the coin will bounce back and continue to rise, there are also people like Turkey’s Deputy Prime Minister Mehmet Simsek, a former Merrill Lynch economist, who said that it was ‘the biggest bubble in finance history’.
Similar sentiments were echoed by Nouriel Roubini, Professor of Economics at New York University, who called it ‘the mother of all bubbles’ favored by ‘charlatans and swindlers’
Holden says, “The most bullish of Bitcoin’s evangelists, has confidently predicted that the cryptocurrency will hit $1 million by 2020. Other traders, executives, and analysts, while somewhat less sanguine than McAfee, believe that its value will continue to rise from its current level. However, it should be observed that many of those making bullish predictions are stakeholders with a vested interest in the cryptocurrency’s success.”
Holden says in the white paper accompanying Juniper's research that the firm is aligned far more closely with the cryptocurrency skeptics than the evangelists.
“We do not believe a recovery to the levels witnessed in 2017 is likely...Indeed, we would argue that further falls are highly probable," he concludes.