In his article, dated March 16, researchers of entrepreneurial risks ETH Zurich Spencer Whitley (Spencer Wheatley)] and Didier (Didier Sornette) predict that by the end of 2018, the market capitalization of bitcoin falls to 77 billion dollars.
To such conclusions they came to based the calculations on Metcalf law, according to which the network’s utility is proportional to the square of the number of users on this network. If you apply this principle to the cryptocurrency market and directly to bitcoins, since the growth of active users is slowing, the end of the year capitalization of the main cryptocurrencies will be no more than 77 billion dollars, about $ 50 billion smaller than the current value.
The cost of bitcoin in 2017, increased by 13 times, but in the first months of 2018 fell more than 50%.
«Our analysis found significant overvaluation of bitcoin. This suggests that we are waiting for long months of bi-directional price spikes,» the researchers note.
The study also was used the model «Log-Periodic Power Law Singularity,» which helps to calculate the possibility of the collapse of prices.
According to this model, in the history of bitcoin, there were four such bubble. One of the triggers of the first bubble was breaking cryptocurrency exchange MtGox in 2011 and the latest was December recent threats to Korean regulators to close the cryptocurrency exchanges in the country. These events provoked severe collapses of prices and correction.
In mid-December 2017, due to increased interest from retail and institutional investors, as well as the launch of cryptocurrency derivatives exchanges CME and CBOE, bitcoin reached a record level of $ 20,000.
However, in the beginning of the year the enthusiasm of investors in relation to bitcoin and other cryptocurrency has dropped significantly. This contributed to a tightening of regulatory policy in the United States, South Korea and Japan.
Most supporters of cryptocurrency believe that once the situation with regulators stabiliziruemost, then bitcoin will recover. Moreover, in their opinion, the technology of the blockchain inherent revolutionary potential to change the world as it once did the Internet.
However, scientists do not share their optimism:
«Don’t focus on any one event that could change the market in one direction or another. Instead, it is necessary to monitor the increasingly fragile state of «bubble market» and to prepare for correction.»
It is worth noting that the well-known financial analyst Tom Lee (Tom Lee) in February of this year also in their assessments was based on the law and Metcalfe predicted the growth of bitcoin in 2018 in 2-3 times.