Bitcoin prices will continue to plunge over the next few months because the over-hyped cryptocurrency is “worthless.” That’s what one London-based investment research firm boldly declared in a note April 5.
Capital Economics, which provides macroeconomic research, analysis, and forecasts, downplayed the suggestion that there’s any correlation between bitcoin price movements and the equity markets, saying the asset classes are fundamentally different because virtual currencies have no value. Yikes.
“The factors driving bitcoin prices are still rather different to those driving the prices of other assets,” Capital Economics said in a note. “Bitcoin’s correlation with equity prices has strengthened recently, but we think that this will be just temporary.”
“We still think that bitcoin is essentially worthless, meaning that it is likely to fare much worse than other assets in the coming months.”
Capital Economics said the recent correlations observed between bitcoin price fluctuations and the volatile stock market is merely coincidental. The values of bitcoin and other cryptocurrencies have plummeted in recent weeks amid a barrage of negative news, including heightened regulatory scrutiny and advertising bans on Twitter, Google, and Facebook.
“Not a Credible Long-Term” Investment
BTC prices — which rocketed to $19,000 a token in December 2017 — have cratered to less than $7,000 this week.
Capital Economics said the real reason why the bitcoin price is nosediving is because the opaque, unregulated digital currency is worthless.
“The main factor driving down the price of bitcoin is likely to be a realization that it is simply not a credible long-run alternative to conventional currencies,” the investment research firm noted.
This dismal outlook on the crypto ecosystem is among the most bearish in recent months. Many die-hard crypto evangelists insist that the people freaking out over bitcoin’s erratic daily price swings have a trader’s short-term mentality, not an investor’s long-term outlook.
Peter Saddington, an Atlanta-based computer coder, has been buying bitcoin every Friday since 2011, when its price hovered at just $3 a coin. Last fall, Saddington, 35, rewarded himself by buying a $200,000 Lamborghini Huracan and paying for it with 45 bitcoins.
Saddington is part of a growing group of crypto enthusiasts who are flocking to buy Lamborghinis, which have become the ultimate status symbol to showcase one’s cryptocurrency wealth.
“I am a long term ‘HODLer,’ or holder of bitcoins,” Saddington told CNBC. “I’ve been holding it since 2011 as much as I can.” HODL is a slang term in the bitcoin community meaning to hold on to the cryptocurrency rather than sell it.
Other HODLers are cryptocurrency billionaires Changpeng Zhao, the founder of popular crypto exchange Binance, and the Winklevoss twins, Tyler and Cameron. All are convinced that crypto is the wave of the future.
“I’m convinced 100 percent that crypto is the future,” said Zhao. “I just know it will happen.”
Zhao knows a little something about making money. Forbes just released its first-ever list of cryptocurrency billionaires. And Zhao, 41, landed at No. 3 in the rankings, with an estimated net worth of $1.1 billion to $2 billion.