A lot of financial experts are still debating whether the Bitcoin bubble has burst and ponder its future on the international market. Is the world’s most popular cryptocurrency just a bubble or is it something more resilient?
Market strategists at Barclays believe that it was the massive demand that cause Bitcoin’s value to rise so dramatically and now that the demand has weakened, bitcoin’s value has plummeted.
Barclays analysts believe that the massive rush to acquire bitcoin in 2017 was based on the fear of missing out on possible gains. Now, with increasing awareness of digital assets, those who are thinking of putting their money into Bitcoin will most likely weigh their options a bit more before buying into the cryptocurrency.
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In a statement, Barclays analysts said
Combined with the results of our theoretical modeling, survey findings suggest that, unlike the peaks in Bitcoin prices in 2011 and 2013, the most recent peak may have been the ultimate top and that speculative interest could decrease from here
This lower demand means that Bitcoin holders are now oversupplied. This state of the market is now dictating the price movement of Bitcoin. The analysis shows that Bitcoin demand pushed up the prices, which was quickly followed by a sell-off.
Bitcoin Thrill Has Worn Off
People are not buying Bitcoin for speculation purposes as much as they did in recent months. Now that investors know more about Bitcoin, they are more aware of its pitfalls. Right now, Bitcoin awareness in the US is at 60%, while Canada's is at 64%. It is even higher in South Korea, which is at 90% and in Japan it is around 88%. This increase in knowledge has lowered the possibility of speculative buying. As bitcoin awareness increases, the chances for bitcoin to reach the $20,000 high of December 2017 have diminished significantly.
Barclays analyst noted that whenever Bitcoin reached its peaks in 2011, early 2013 and late 2013, the value quickly collapsed. The highest collapse witnessed was a 93% slump in value back in 2011, but the other collapses were just as devastating. However, Bitcoin recovered from them and went up to new highs. The problem was that in each of those cases, Bitcoin awareness was still pretty low and there was still a chance for many new entrants into the market. From this latest evaluation, Barclays analysts believe that Bitcoin has moved beyond the speculative phase and has achieved its peak price.
