If you just read bitcoin’s headlines over the past few months, then you would assume that the cryptocurrency is having a good year. Unfortunately, bitcoin’s price has plummeted since reaching its all time high last December – and that’s a “warning signal” for the world’s largest cryptocurrency, according to a new report.
UK-based Juniper Research released a study earlier today that outlines a dire future for the industry:
“If bitcoin cannot make gains in such favorable circumstances, then it is unlikely to prosper as and when these issues are resolved,” explains Juniper researcher Windsor Holden in the study.
“We feel that the industry is on the brink of an implosion.”
Bitcoin has dropped 52% from January to October 2018, and it’s down 65% since reaching an all time high near $20,000 in December 2017. Despite the price drop, bitcoin appears to have had a good year: more and more institutional investors are launching bitcoin-related investment products. Companies like Bakkt are preparing to launch crypto on-ramps. Microsoft, Starbucks, Goldman Sachs, and other major corporations frequently appear in crypto-related headlines.
The fact that bitcoin’s price hasn’t risen on all of this good news is worrying, according to Holden’s research.
The study explains that “further falls are highly probably” in the crypto space, and that the industry is unlikely going to ever recover to its 2017 highs. Holden explained that his firm’s research “is aligned far more closely with the cryptocurrency skeptics than the evangelists”.
Some of the specific issues mentioned by Holden include:
- There has been a decline in the base of individuals willing to pay inflated prices for cryptocurrencies; in order for bitcoin to reach a high of $20,000, we need to have buyers willing to buy bitcoin at $20,000
- Credit card companies have banned customers from buying bitcoin using credit cards
- Social media sites have banned ICO and crypto advertisements
“Taken together, this means that there is likely to be less demand, with less funds available to invest in bitcoin,” explains Holden.
The study also highlighted bitcoin’s potential as a means of money laundering. Bitcoin is used to buy illegal drugs online, for example, which hinders its mainstream acceptance by financial institutions. Bitcoin’s volatility, meanwhile, makes it difficult for traditional merchants to accept it.
The study also covers Juniper’s Cryptocurrency Exchange Positioning Index, which compares services offered by the 14 leading cryptocurrency exchanges. The study also covers the technical, social, and regulatory issues facing cryptocurrency moving forward, including issues ranging from legislative, retailer, and consumer acceptance to user awareness, 51% attacks, and other issues.
In other words, Juniper’s study is a comprehensive look at key issues facing the crypto space – and the research team was not optimistic about what they saw.
The Study Contradicts Crypto Bulls Who Believe We’re on the Brink of a Historic Run
Over the last few months, most analysts have taken a bullish approach to the market: they believe the bear market will continue to the end of 2017 and into 2018, but that markets will begin picking up from that point forward.
The world’s first bitcoin ETF, for example, could be approved over the coming months by the SEC, and many analysts believe that would set off the longest bull run in bitcoin history.
Juniper Research’s latest report, however, takes the opposite stance, stating that the crypto bubble has not yet fully burst, and that the entire industry is about to collapse in the near future.
You can view the full report from Juniper Research here.