Bitcoin (BTC), Cryptocurrency–Despite the small uptick in valuation for Bitcoin over the past week, a new study out of analytics firm Juniper Research states that the cryptocurrency markets look in danger of imploding, with a gradual decrease in transaction volumes being cited as the main evidence for such a concern.
First reported by Bloomberg on October 9, Juniper Research reports that the decline in daily transaction volume for Bitcoin and other larger name cryptocurrencies is an overwhelmingly negative signal for the valuation of the industry, with quarter over quarter transactions plummeting throughout the year. As Bloomberg points out, the report by Juniper echoes that of other mainstream analysts in calling for a looming implosion for Bitcoin and the wider cryptocurrency market, with their current metrics and analysis pointing to further decline.
According to the study, Bitcoin daily transaction volumes have fallen from an average of 360,000 per day at the end of 2017 to 230,000 per day as of September 2018, constituting a 36 percent decrease in activity. In addition to low trade volume, daily transaction values also plummeted during that time, dropping from $3.7 billion to less than $670 million.
However, while Bitcoin does show a steep decline in trade volume and transaction value, the entire cryptocurrency market has seen a widespread contraction from late 2017, as the market continues to undergo a severe and prolonged bear cycle. At the end of 2017, BTC was trading at close to $20,000 per coin in addition to a bullish run for most of the altcoin market, constituting much higher daily transaction values. Cryptocurrency was also more prominent in the national spotlight during that time, with popular mainstream news outlets reporting on the daily price leaps and overnight riches made through the cryptocurrency market. The end result was a flood of new investors, as reported by Coinbase when their customer base rose above 13 million–or greater than that of long-time stock brokerage Charles Schwab. The flux of investors could have accounted for the massively elevated transaction volume and valuation, which has subsequently eroded throughout 2018 alongside the falling price of crypto.
Despite the massive change in the crypto market landscape between December 2017 and now, Juniper cites the steep drop-off in transaction value between quarters in 2018 as troubling analytics for the industry. While cryptocurrency transactions totaled $1.4 trillion in the first quarter of 2018, compared to $1.7 trillion for all of 2017, that number fell more than 75 percent into Q2, with the total market capitalization also falling precipitously.
In a white paper that accompanied the research article, an analyst for Juniper expanded on the group’s belief that the crypto markets will continue to exhibit quarter over quarter losses
“Based on activity during the first half of Q3, Juniper estimates a further 47 percent quarter-on-quarter drop in transaction values in that quarter,”
With the ongoing price depression for Bitcoin and the greater altcoin market, combined with the precipitous fall in transaction volumes and valuation, Juniper predicts that cryptocurrency is in for hard times ahead, with a relative market “implosion” looming on the horizon,
“In short, given our concerns around both the innate valuation of Bitcoin, and of the operating practices of many exchanges, we feel that the industry is on the brink of an implosion,”