The predictions of Spencer Wheatley, Didier Sornette, et al, of ETH Zurich’s Department of Management, Technology and Economics, and Swiss Finance Institute at the University of Geneva, Switzerland, says that bitcoin lovers are not going to bid farewell to this year on a very happy note. This is because of the fact that the prediction says bitcoin market capital might see a fall of about 35% from the present value which is near about 44 billion dollars.
According to Mr Spencer, “for bubbles and crashes in bitcoin, by analyzing the coincidence (and its absence) of fundamental and technical indicators. Using a generalized Metcalfe’s law based on network properties, a fundamental value is quantified and shown to be heavily exceeded, on at least four occasions, by bubbles that grow and burst”.
One of the main reasons could be the decline in the number of bitcoins users. The use of bitcoin in all arena has slowed down rapidly, bringing a fall in the price. Moreover, it is still challenging for the researchers to find out the number of users as most of the users have more than one wallet address. It’s obvious that if the fall of the price can decline the number of users, increase in price can bring in more number of users.
The study says, “The Metcalfe support line suggest current values around 44, 22, and 33 billion USD, respectively, in contrast to the actual current market cap of 170 billion USD. Further, assuming continued user growth in line with the regression of active users starting in 2012, the end of 2018 Metcalfe predictions for the market cap are 77, 39, and 64 billion USD respectively, which is still less than half of the current market cap. These results are found to be robust with regards to the chosen fitting window. On this basis alone, the current market looks similar to that of early 2014, which was followed by a year of sideways and downward movement. Some separate fundamental development would need to exist to justify such high valuation, which we are unaware of”.
Moreover, South Korea’s warning to ban the exchange of bitcoin and Mt Gox crisis could be a threat to whole bitcoin community.