Some, like Kevin Dowd, professor of finance and economics in the Business School at Durham University, have a fairly grim prognosis for the cryptocurrency. Dowd cites, among other criticisms, Bitcoin is battling against superior products and destined to fail. Also making pessimistic claims were analysts Murad Mahmudov and Nouriel Roubini, who echoed Dowd’s sentiments, firing off tweets indicating their own bleak predictions for Bitcoin. Roubini took to Twitter to emphasize Dowd’s expectations:
@Nouriel Jan 13
"Bitcoin is a natural monopoly in mining and its long term value is zero as it is an inferior product. Bitcoin Will Still Bite the Dust"
Mahmudov, whose prediction falls short of terminal, is anticipating a drop in the currency’s value to as low as $1,700 by April, based on historical trends. The last of his nine-tweet thread reads:
@MustStopMurad Jan 13
"If the above dynamics are correct and history does indeed rhyme - which is a big if — We can expect a 1700-2200 bottom in the Spring (most likely April)."
However, a recent report from Delphi Digital paints a more optimistic picture, as it considers the currency a potential “complement to investments like gold given similar traits like scarcity, while offering unique advantages in a digital age... Bitcoin may face additional selling pressure in the near-term, but we believe prices will bottom in Q1 2019 based on our analysis of holder dynamics during prior boom-bust cycle.”
According to information in the report, the Bitcoin supply has a hard, finite amount of 21 million based on mathematical algorithm. About 2 to 3 million Bitcoin are presumed lost.
“Pump and Dump” Schemes, Price Manipulation Pervasive in the Industry
A report from researchers from the Berglas School of Economics, Tel Aviv University, Israel; Tandy School of Computer Science, The University of Tulsa; and the Department of Computer Science, University of New Mexico, warns of the abuses in the general crypto currency market. It cites nearly 5,000 such schemes in a six-month period last year on group messaging platforms Telegram and Discord. A lack of consumer confidence could inhibit the market, according to some analysts.
“The surge of interest in cryptocurrencies has been accompanied by a proliferation of fraud,” the paper reads. “While the fundamentals of the ruse have not changed in the last century, the recent explosion of nearly 2,000 cryptocurrencies in a largely unregulated environment has greatly expanded the scope for abuse.”
According to information from the researchers, Discord has 130 million users and Telegram has 200 million. They cited them as the “most popular” outlets for the cryptocurrency schemes. “The schemes promoted more than 300 cryptocurrencies. This comprehensive data provides the first measure of the scope of pump and dump schemes across cryptocurrencies and suggest that this phenomenon is widespread and often quite profitable,” the report reads. “This should raise concerns among regulators”
Fintech author David Gerard reported watching the pump and dumps take place in real time. The spikes in price and subsequent drops, called “Barts” after the hairstyling of the famous Simpsons cartoon character, are apparent, he reports.
“It’s a thinly-traded unregulated playground for whales, out to wreck the margin traders,” wrote Gerard.