Industry experts are buzzing with this week’s sensational claim that the market is headed for a collapse.
Juniper Research published data this week that it claimed pointed to a cataclysmic collapse in the cryptocurrency market that could be just round the corner. The report, titled The Future of Cryptocurrency: Bitcoin & Altcoin Trends & Challenges 2018-2023, cited shrinking trading volume and asserted that a death spiral has actually already begun.
Was This Simple Attention Seeking?
The Juniper Report made headlines around the internet, but that was to be expected for a $1,250 report. The counterpoint to Juniper Research’s claim is that early excitement giving way to a stable digital economy will inevitably bring a lull in the market, but in the long run is exactly what the crypto market needs to mature.
From the opposing viewpoint, these cyclical periods of peaks and troughs are an integral part of the investment world. Jake Choi, Chief Marketing Officer at Fantom, has seen Bitcoin written off way too many times to take this particular apocalyptic threat too seriously:
“We believe that the volatility in daily transaction volume and value are a given as we are forming a new asset class with cryptocurrencies. Mainstream economists have declared Bitcoin’s ‘death’ time and time again, and it has always come back in a stronger magnitude,”
Jake Choi, CMO, Fantom
Rafael Delfin, Head of Research at Brave New Coin, echoed Choi’s words and called attention to the positive signals from regulators and institutional investors.
“While this research does point out metrics that support a bearish scenario for crypto markets,” Delfin said in a statement, “the authors [of the Juniper Report] fail to acknowledge simultaneous positive developments in the ecosystem that support a bullish case for the ecosystem.”
These positive developments could open the valves for new investment, he continued:
This year, major financial institutions have joined the industry, and high-profile crypto market participants are forming bodies to self-regulate. This will provide transparency, which will pave the way for mass adoption.
New regulations around the world are providing certainty and legitimizing stakeholders in the crypto space. This research suffers from a negative bias that wasn’t fully acknowledged.
Rafael Delfin, Head of Research, Brave New Coin
What Could Invigorate Crypto?
A turn in the market could bring the investment flooding back in. A number of countries are relaxing their cryptocurrency regulations, institutional investors are on the way and ETFs could yet change the face of crypto investing. Retailers are also waking up to cryptocurrency and mainstream acceptance is on the way.
These can all breathe new life into the cryptocurrency exchanges, which will bring casual investors back and create new momentum. A simple boost for the market sentiment can change the face of the crypto market and bring in a flood of investment.
The Heart of Juniper’s Case
Juniper Research argued that Bitcoin’s daily transaction volume has slumped from 360,000 a day in late 2017 to 230,000 in September 2018. Daily trading volume has dropped by just $3.7 billion to slightly under $670 million in the same time-frame, according to the study.
A slump in market transactions has has seen a year-on-year drop of $0.3 trillion dollars to $1.4 trillion for the first quarter of 2018. Transaction values fell by 75% in the second quarter.
All Bad News in Juniper’s World
The report predicts that the results for Q3 will be even worse and that the market could have entered a terminal spiral. The report said: “Based on activity during the first half of Q3, Juniper estimates a further 47 percent quarter-on-quarter drop in transaction values in that quarter.”
There are many developments happening each week, though, that haven’t been factored into this equation. While caution is always advisable, it might be a bit too early to panic just yet.
The author is not invested in digital assets.