A group of Swiss professors published a paper indicating that the market value of Bitcoin shouldn’t be higher than $77 billion by year-end as per “Metcalfe’s Law.” This suggests an over 36% drop of its current $126 billion market cap.
In a paper named “Are Bitcoin Bubbles Predictable?” dated March 16th, 2018, a group of researchers, including Swiss professors Didier Sornette and Spencer Wheatley from ETH Zurich, stated that the value of Bitcoin’s network is directly proportional to the square of its users, citing Metcalfe’s Law.
By that logic, Bitcoin’s market cap should cripple down more than $41 billion, or over 36%, given its market capitalization during the time of press.
Cloudy Future According to Researchers
Despite Bitcoin’s wild run last year, its price went straight downhill in the first quarter of 2018. As of the time of writing, Bitcoin is currently trading at $6,879.25, representing a 7.9% drop within the last 24 hours, according to CoinMarketCap.
The Swiss researchers went on to suggest that the ramping volatility is far from being over.
“Looking forward, our analysis identifies a substantial but not unprecedented overvaluation in the price of bitcoin, suggesting many months of volatile sideways bitcoin prices ahead (from the time of writing, March 2018),” reads the paper.
Recovery after Regulation
As opposed to the stipulations in the cited research paper, prominent Bitcoin proponents remain bullish. Back in March, LDJ’s Capital David Drake went on record, saying that Bitcoin will go to $30K by year’s end. In an exclusive Bitcoinist interview from yesterday, Drake confirmed that he maintains his position, saying that there has been a push down on the pricing from “big investor groups” who stepped in rather late in a market that’s yet to be regulated.
Drake also mentioned in the interview that the outcome of the regulatory dispute between the SEC holding that ICOs (Initial Coin Offerings) are securities as opposed to the CFTC’s position seeing Bitcoin as a commodity “will give direction on this and that is what everyone is waiting for.”
Furthermore, we saw Tom Lee, Head of Fundstrat Global Advisors, maintaining that the sharp drops in the price of Bitcoin might be largely over and that HODL makes sense. Lee also makes the same point as David Drake, holding that the regulatory hurdles are much likely to be over in the second half of 2018.
And while regulations should signal potential acknowledgment, Bitcoin’s price, as well as that of most major altcoins, continues to swing like a pendulum.
Do you think Bitcoin has reached the end of its bearish run? Or do you think rock bottom is yet to come? Please let us know in the comments below!
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