10 Oct Juniper Research: Why bitcoin will not bounce back next year
A new study from Juniper Research is bearish on bitcoin and predicts that the value of annual Bitcoin transactions is expected to slide further in the latter half of next year.
According to the study, Bitcoin has not only fallen sharply from its December 2017 peak, but failed to recover despite the weakness of a number of leading fiat currencies, continuing uncertainty around Brexit outcomes and ongoing trade disputes between the US, China, and the EU.
The study suggests that if bitcoin can’t recover in these favorable circumstances, it is not likely to recover as these issues are resolved.
Market & trading challenges
The report notes that trading volumes have dropped from 360,000 trades daily in December 2017 to just 230,000 in September 2018. Daily transactions also decreased during the same time from $3.7 billion to less than $670 million.
In addition to the thin trading volume, volatility has put a damper on new investor interest.
Regulators in numerous jurisdictions are taking a closer look at cryptocurrencies, exchanges, and protection of investors. Numerous high-profile cryptocurrency exchange hacks, ICO scams and high-profile fraud charges are hindering market growth.
The impact of banks restricting the purchase of bitcoin and other digital currencies with debit and credit cards is also limiting new investor interest. Advertising bans on Google, Facebook and Twitter have made it challenging to reach investors.
A bubble burst ahead?
With these fundamentals at play in the cryptocurrency market, Juniper Research report author Dr Windsor Holden is decidedly bearish on bitcoin.
“Bitcoin has no intrinsic value. Like any asset, it is worth whatever someone is prepared to pay for it, but it has no meaning or existence beyond the confines of the ledger. It is a bubble, and there is a strong possibility that this bubble could burst in the near future,” Holden says.
He says many of the analysts who are bullish on cryptocurrencies have vested interests, making it difficult to find independent analysis.
Not only is Holden skeptical about any recovery, he believes there is further room for bitcoin prices to decline even further. “In short, given her concerns about the innate valuation of bitcoin, and of the operating practices of various [cryptocurrency] exchanges, we feel that the industry is on the brink of an implosion.”
What’s an investor to do?
The Juniper Research report does not raise any new issues or insights into the challenges with cryptocurrencies. Rather, by reprising the earlier collection of criticisms of cryptocurrency, it concludes that bitcoin and crypto have no room to recover and in fact may be on the path to a bubble bath for investors.
Cryptocurrency bulls and promoters will find nothing new to change their optimistic view that the cryptocurrency market is ready to return to positive territory.
As always, investors need to do their due diligence, speak with qualified advisors and investigate the views of a wide range of analysts in order to make informed investment decisions.
You can download a free copy of a summary of the Juniper Research report here.
Visuals courtesy of Juniper Research