Bitcoin’s rocketing highs of December last year, to their lows of the current day, have been likened to the flu by analysts at Barclays. A price model has been built which likens the mania that was seen in Bitcoin to an infectious virus, but they now state that there is an immunity building up.
Because of this apparent ‘immunity’ the analysts are saying that it is unlikely that there will be much more mass adoption as new, former and current investors hold back on the urge to enter the market.
Recovery from the mania
The model that has been built by the Barclays analysts is in order to try and predict the price movements, and in doing so, it has also attempted to explain the way in which Bitcoin has moved in the past few months.
“Like infection, transmission, especially to those with 'fear of missing out,' is by word-of-mouth, via blogs, news reports and personal anecdotes," Barclays analyst Joseph Abate wrote. "However, once full adoption is approached, the price decline is sustained and rapid."
The flu analogy continuous as the analysts say that the awareness around cryptocurrencies has become almost universal and to that end, there are no new investors who have not had a chance to become ‘infected.’
They go on to state that there is only a small percentage of the global population that will catch the speculative bug and buy in.
"We believe the speculative froth phase of cryptocurrency investment – and perhaps peak prices – may have passed," Abate said
Three-part model
The model splits the global population into three sectors: those who are susceptible, those who are vulnerable but not yet infected, and those who are immune.
The "infected" in this model are the 0.1 percent of the population who first bought cryptocurrencies with an unknown long-term fundamental value.
Another 25 percent of the population was susceptible to the new asset, mostly drawn in by "fear of missing out," Barclays analysts said. Some of the global population is "immune," and will never buy the asset.
What of the believers?
The model may comment on those who are still to invest and be ‘infected,’ but seems to leave out those who are in it for more than speculative reasons. There is little mention of the fundamental technology boom of Blockchain, that accompanies it, or the advancement of ICO and other currencies.
The model seems very superficial and only plays to those who are in the cryptocurrency game for the opportunity to make high returns that were synonymous with digital currencies going back to December.
Arman Shirinyan
Alex Dovbnya
