Investors should brace for an imminent collapse in the entire cryptocurrency market following a steep decline in the value of Bitcoin over the last year, a new study from Juniper Research has warned.
In a report published on Monday, the firm highlighted how the price of Bitcoin had fallen to just $6,594 (£4,994) – one-third of the peak value recorded back in December last year. Transactions had plummeted from an average of 360,000 each day in late 2017 to just 230,000 last month, with values down from more than $3.7bn to less than $670m.
Researchers went even further by suggesting that “based on activity during the first half of Q3, Juniper estimates a further 47 percent quarter-on-quarter drop in transaction values.”
The market failed to rally even amid strained China-U.S. trade relations and Brexit-related troubles, the researchers noted -- prime conditions for proving cryptocurrencies’ advantage as an alternative to the traditional financial system.
Juniper Research said failure to make gains in these circumstances, and the prospect of closer regulatory scrutiny, had cast doubt on the future of the cryptocurrency. Moreover, a ban on social media sites like Google and Twitter, and the curtailing of credit card purchases by many financial institutions, are both expected to lead to a further fall in demand.
The company has said: “In short, given our concerns around both the innate valuation of Bitcoin. And of the operating practices of many exchanges. We feel that the industry is on the brink of an implosion.”
They expanded on this further by saying: “While the value of cryptocurrencies will remain high for as long as there are individuals who are willing to pay inflated prices for them, it appears that the base of such individuals is in decline.”
The firm also said bodies like the International Monetary Fund would likely demand more stringent licensing in the future, or possibly even prohibit trading all together.
Meanwhile, one of the few economists to predict the 2008 financial crash yesterday warned US politicians that Bitcoin was the “mother of all scams.”
Speaking at a congressional hearing, New York University professor Nouriel Roubini said: “No asset class in human history has ever experienced such a rapid boom and total utter bust and implosion.”
“The entire cryptocurrency land has now gone into a crypto-apocalypse as the mother and father of all bubbles has now gone bust.”