‘Bitcoin may not last much longer’
The cryptocurrency has had a horror five weeks but rather than bouncing back, one expert thinks the coin is on its last legs.
A university professor has issued a stark warning about bitcoin following weeks of turbulence with the cryptocurrency’s price.
For the sixth week straight, bitcoin has been in the red, despite hitting an all-time high of nearly $US69,000 ($A96,000) on November 10.
Now, at time of writing, bitcoin is sitting on just $US46,600 ($A65,400), meaning the blockchain has shed $US23,000 ($A32,000) in value or 33 per cent in just several weeks.
It’s a point not lost on Eswar Prasad, a senior economics professor at US Ivy-league Cornell University.
“Bitcoin itself may not last that much longer,” he told CNBC last week.
The expert, who has authored ‘The Future of Money: How the Digital Revolution is Transforming Currencies and Finance’, is a proponent of blockchain technology.
However, Prof Prasad thinks bitcoin isn’t as good as other cryptocurrencies out there and will fade away soon as better coins take the world by storm.
“Bitcoin’s use of the blockchain technology is not very efficient,” Prof Prasad said.
The cryptocurrency “is environmentally destructive” and “doesn’t scale up very well,” he explained.
He’s not wrong. Bitcoin, which has a market capitalisation of $US885 billion ($A1.2 trillion), produces 36.95 megatons of CO2 annually through its transactions – similar to New Zealand’s carbon footprint.
The professor also said that hype was why bitcoin had reached many new heights rather than its actual utility as a coin.
“Given that bitcoin is not serving well as a medium of exchange, I don’t think it’s going to have any fundamental value other than whatever investor’s faith leads it to have,” he explained.
The professor was still bullish about cryptocurrency on the whole; he said blockchain technology was “fundamentally transformative” and had forced banks to “start thinking about issuing digital versions of their own currencies”.
Prof Prasad is not the only highbrow academic to warn about bitcoin in recent weeks.
Another investor pro reckons the tumultuous few weeks for bitcoin are signalling a death knell for the token.
Marc Chandler, chief market strategist at Bannockburn Global Forex, warned the recent happenings were “deadly” for bitcoin.
“The idea that as it matured, the volatility would ease has not really materialised,” he told Bloomberg.
“The volatility is deadly and its other supposed attributes, like a hedge against inflation, seems spurious.”
Bitcoin’s slide has dropped below a key level that has experts worried.
It is now close to a 200-day moving average of about $US46,720 ($A65,655) – which is bad news for the coin.
Another economic forecaster said a 200 day moving average below $US46,000 was a “yellow flag” and indicated that bitcoins will soon only be worth $US10,000 ($A14,000) each if the slide continues.
Well known investor Louis Navellier said earlier this month:“ I would take a decline below $US46,000 (the 200-day moving average) to be a yellow flag and a decline below the spring low of $US28,500 ($A40,000) to be a completed massive double top, which points to a decline to below $US10,000, which incidentally would match many of the multiple 80+ per cent declines in its storeyed history.”
However, other experts are bullish about cryptocurrency, particularly bitcoin, heading into 2022.
Tommy Honan, head of corporate partnerships at Aussie crypto exchange platform Swyftx, told news.com.au earlier this month that bitcoin could easily be within $US150,000 ($A210,000) territory at its peak next year.
Greg Rubin, head of trading at Aussie firm Global Prime, also thinks bitcoin will hit six figures early next year, however that came with a warning.
He estimates the top-ranked coin will hit between $US114,000 ($A158,000) to $US130,000 ($A181,000) in the first quarter of next year.
However, after that, prices would drop dramatically, where they would remain.
“Looking at the scale of probabilities, it seems the most likely end to the bull run that kicked off in 2020 will be next year,” he told news.com.au.
Bitcoin’s price would plunge to $US10,000-$US20,000 ($A13,000-$A27,000) mark, a drop of around 70 per cent, where it would remain.
“When the volatility dies down, it [bitcoin] will meander on low volume for years,” he explained.
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