Analysts in Barclays Plc acknowledged the sudden rise in Bitcoin’s value as the spread of an infectious disease, reported cryptovest.com. They claimed that recent fall in bitcoin’s prices resembles the immunity people have developed against the luring currency.
The analysts said that the sudden boom of December 2017 in the crypto market was similar to the flu which is becoming weak and it is evident as the market price is continuously falling. As of now, bitcoin’s hay days have become history as it has slipped down to $6,600 against the peak of $20,000 reached in December last year.
Joseph Abate, a leading analyst at Barclays, has developed a pricing model for cryptocurrency based on the terms and concepts from epidemiology. The theory suggests that bitcoin’s best days have long gone.
The model categorizes bitcoin investors into three groups- infected, susceptible and immune. Buyers spread the ‘infection’ when they spread the fear of “missing out” among other traders.
Moreover, with the increase in the strength of buyers, the number of potential new buyers significantly drops but the potential seller count increases. Eventually, people lose interest in digital currencies as they become immune to its attraction and prices fall down.
The analysts said, “As more of the population become asset holders, the share of the population available to become new buyers — the potential ‘host’ population — falls, while the share of the population that are potential sellers (‘recoveries’) increases. Eventually, this leads to a plateauing of prices, and progressively, as random shocks to the larger supply population push up the ratio of sellers to buyers, prices begin to fall. That induces speculative selling pressure as price declines are projected forward exponentially.”
The analysts sum up their conclusion by claiming that bitcoin will never be able to reach the heights it touched last year. They further added that secondary infections never occur after the sick has developed immunity to the disease.
Thus, “We believe the speculative froth phase of cryptocurrency investment – and perhaps peak prices – may have passed.
According to a new report in Forbes, bitcoin might jump back to its original height. Chief Strategy Officer NYNJA, Marshall Taplits, said, “Speculation on price is always difficult. However, the trend for Bitcoin is clear – UP, going to about USD 20,000 from zero in 10 years. Each time Bitcoin corrects, the media wrenches. However, anyone who has been watching cryptocurrency since the beginning knows to bet on $30,000.”
Many investors are bullish on cryptocurrencies, especially bitcoin. In defending bitcoin, they often say that it has withstood the test of time by combating the likes of negative media coverage and harsh government regulations. On the other hand, the bearish investor acknowledges bitcoin as a mania which has to end. With the rise in supply, the demand will lack behind, and bitcoin will go back to its fundamental value of $1,000.
2018 can be the defining year for cryptocurrencies as people backing it up have predicted its rise by the end of this year. It will be interesting to watch it bitcoin beats expectations and raises over $30,000 or sells for pennies.