Bitcoin Price Bubble Already Burst, Banks Says

Bitcoin Price

The Bitcoin price (BTC) bubble has already burst as the value of the largest coin plunged 65% since hitting all-time high few months ago. BTC price currently trades around $6,800 level, and the big banks expect the price to slide steadily over the following months. Analysts of Bank of America Merrill Lynch (BAML) believe that bitcoin is one of the greatest asset-price bubbles in history.

BAML analysts compared the bitcoin price bubble with other famous financial bubbles, including the Dutch tulip, Mississippi Company, gold, South Sea Company in the 18th century, and the U.S. stock market in 1929.

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Bitcoin price has been tanking at a robust pace since peaking around $19,600 level. BAML analysts think the bitcoin bubble has already burst and Bitcoin is set to crash further in the days to come.

“The cryptocurrency is tracking the downfalls of the other massive asset-price bubbles in history less than one year out from its record,” Chief Investment Strategist Michael Hartnett said.

Why Couldn’t Bitcoin Sustain its Price Momentum?

Bitcoin price has been collapsing at a steady pace over the last three months, and analysts have the diverse opinion regarding the price crash. Some are blaming bearish comments from major analysts and regulatory pressure for the price collapse, while others believe scams and frauds associated with cryptocurrency markets tanked traders interest.  

Barclays analysts, however, created a model to examine the ups and downs in BTC price; the bank’s model exhibited that Bitcoin acts similar to a viral disease – which has been treated fairly well by market participants. The bank believes that BTC price has peaked at the end of last year and it is set to decline steadily over the following quarters.

The bank’s model compared the pool of speculative investors with the actual price movement to predict the future price dynamics. Barclays said, “The model has clear parallels with compartmental models of the spread of an infectious disease in epidemiology.”

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