Despite registering a slight grow these days, analysts are not optimistic regarding Bitcoin’s future. The world’s biggest cryptocurrency, in terms of market cap, is expected to have a total value of less than $77 billion, by the end of 2018.
According to a report from CNBC, citing a research paper conducted by Spencer Wheatley and Didier Sornette, professors of entrepreneurial risks at ETH Zurich, this is based on an estimate based on Metcalfe’s law.
Will science-based principles be applied here as well?
Specifically, the law says that the value of a network is directly proportional to the square of its users. Therefore, by a generalization of that principle, Bitcoin’s overall market value, by the end of the year, will not surpass the mentioned value.
If this eventually happens, it will record a loss of $41 billion, or nearly 35 percent. Considering that right now the capitalization is 125 billion, this is obviously a huge amount.
In 2017, Bitcoin’s price increased more than 13 times, but in the first quarter of 2018, it fell more than 50 percent. The week caught the coin trading at near $7,000, managing to reach $7,354 at the time of the writing.
“Looking forward, our analysis identifies a substantial but not unprecedented overvaluation in the price of bitcoin, suggesting many months of volatile sideways bitcoin prices ahead (from the time of writing, March 2018),” the report made by the Swiss researchers said.
The controversial bubbles, confirmed
The team also found that there were actually four Bitcoin bubbles, ranging from a 2011 hack, at the now history Mt. Gox exchange to the South Korean regulators’ threat to close all cryptocurrency exchanges in December 2017. Eventually, these events were succeeded by crashes or strong corrections, which destabilized the market.
On the other side, a surge of retail, alongside institutional interest in the cryptocurrency helped bitcoin rise to almost $20,000 in mid-December. At the same time, Bitcoin futures were launched, somehow confirming the expectations of increased institutional investment.
Over the past few months, due to increased scrutiny from regulators in the United States and other major markets, like South Korea or Japan, have tampered the enthusiasm regarding Bitcoin and altcoins.