*Transactions have plummeted in half since December
*Bitcoin rises in price, but transactions continue to fall
Earlier this year, when the price of bitcoin fell by more than 60% from highs, this digital currency was in all media and conversations. What was not talked about so much is another collapse that is perhaps more important than the fall of its own price: the number of daily transactions is at levels of when the bitcoin was worth $ 500 in August in 2016. Has it gone out of fashion? the bitcoin?
Without going any further, today the Governor of the Bank of England, Mark Carney, has stated that cryptocurrency has "failed" as a substitute for traditional money. He also assured that many of them present the classic bubble structure.
There are many explanations about the drop in transactions with this cryptocurrency; from those related to software to those linked to fear due to the continuous negative news about bitcoin and the rest of cryptocurrency. What has not been explained is why the level has not recovered with the recent 'rally' of bitcoin in which its price has rebounded by 50% since February 5. That has led some investors to wonder if the cryptocurrency is losing popularity.
The average of daily transactions has fallen approximately in half from its highs in December and touched its lowest level in two years last month, even though bitcoin managed to consolidate above $ 10,000.
Bad news for bitcoin
The transaction figures are bad news for investors in these types of assets, according to Charles Morris, chief investment officer at Newscape Capital Group in London, which invests in cryptocurrencies.
"We had a fashion phase and now it's getting cold," explains Morris, who is working on a project that will make it easier to discover the price in several cryptocurrencies, in a telephone interview from London. "We could just be entering a bear market" for bitcoin.
Transactions have plummeted from a weekly average of 400,000 transactions in mid-December, to about 200,000 this week, according to research firm Blockchain.info. The last time such a low level of movement was recorded, the currency was exchanged for $ 500.
Not all experts believe that the drop in transaction volume is a negative signal for bitcoin. It could be a return to normality and a sign that the market is maturing and reaching sustainability.
If prices start to rise again, traders could be seduced again, says David Drake, whose family investment firm in New York has more than $ 10 million in cryptocurrencies and blockchain investments. Drake projects that bitcoin will reach $ 35,000 by the end of this year.
The same fall in prices could be the reason for the lower transaction volumes with bitcoin bitcoin. Websites that previously only accepted bitcoin payments now receive a much wider range of digital currencies, according to Kyle Samani, an executive partner in the Multicoin Capital cryptocurrency hedge fund. This makes alternative currencies more attractive than the industry's pioneer.