Cryptos may RIP: Clear signs that the end could be near
Bitcoin (BTC), has led the crypto world with a formidable run, rising from nothingness to near $20,000 per coin last December.
Lately, it has been sitting in purgatory, with spurts and starts in the over $6300 range, but not really making any progress.
Today, prices crashed.
Regardless, analysts are predicting an early crypto death.
Is crypto in the RIP stage?
Activity speaking volumes
UK-based consultancy Juniper Research said in a recently released study, labeled “The Future of Cryptocurrency: Bitcoin & Altcoin Trends & Challenges 2018-2023”, that the end might be near for the crypto markets amid decreasing transaction volumes, reports Toshi Times.
An in-depth look into the whole crypto ecosystem, from regulatory developments in key markets to mining, exchanges, and wallet providers, researchers provided a crypto exchange index, comparing the services of 14 leading digital asset exchanges.
“Daily transaction volumes for Bitcoin have contracted from around 360,000 a day in late 2017 to 230,000 in September 2018. Daily transaction values have decreased even more dramatically in the same period – from $3.7 billion to just $670 million,” said the report.
Who shrunk the Bits?
Q2, 2018 saw a dramatic slump, with transaction values falling by 75% and the market cap contracting to less than $355 billion, from $800bn in January.
In the whitepaper, accompanying the report, Juniper stated that, “Based on activity during the first half of Q3, Juniper estimates a further 47% quarter-on-quarter drop in transaction values in that quarter.”
“We feel that the industry is on the brink of an implosion.”
Loud crashing sound
The Bitcoinist reported that $13 billion disappeared in ½ hr from the market.
Data from Coinmarketcap captures a sudden slide for BTC/USD taking the pair down nearly $470 in 30-minutes yesterday when it reached a low of $6087.
As Twitter account Whale Alert noted late Wednesday, events followed on from a transfer of over 15,000 BTC to an unknown wallet in a single transaction, sparking suspicions about market manipulation.
15,220 #BTC (100,317,283 USD) transferred from Unknown wallet to Unknown wallet
— Whale Alert (@whale_alert) October 10, 2018
Another theory focused on the current stock market volatility.
Forbes said a recent report from the New York attorney general’s office suggesting “Customers face the risk that the availability of liquidity in those assets could change, without notice and at any time.”
The Bitcoinist said analysts appeared rattled by the dip, like Real Vision Group CEO Raoul Pal summarizing it as Bitcoin “drinking at the last chance saloon.”
— Raoul Pal (@RaoulGMI) October 11, 2018
Ether (ETH), the largest altcoin asset by market cap, more than doubled Bitcoin’s losses to shed 9.2% of its value Thursday, at $205.
“Ripple (XRP) and Bitcoin Cash (BCH), the second and third largest altcoins respectively, fared even worse, both losing just short of 11%,” said the Bitcoinist.
A recent paper by Princeton and Florida International University suggests that China’s influence over Bitcoin’s infrastructure has given the Chinese government the ability to potentially destroy Bitcoin.
Toshi Times say the researchers there write that by understanding the shifting nature of Bitcoin mining, one can understand the shift in power as well and says “Bitcoin is secure in practice but not in theory.”
They said Bitcoin mining was originally managed by normal computers from everyday people, but the increasing computational power required to mine Bitcoins today is too great for a normal computer resulting in the centralization of the mining activity creating a consortia of miners who work together and share profits.
“As of June 2018, over 80% of Bitcoin mining is performed by six mining pools , and five of those six pools are managed by individuals or organizations located in China,” researchers found.
Furthermore, the researcher writes that the Chinese government potentially could influence Bitcoin in four different ways: disrupt competing miners, undermine consensus and destabilize Bitcoin, de-anonymization, and censorship.
Above two graphs courtesy of Research Paper
According to the paper, 74% of the Hash power on the Bitcoin network are in China-based mining pools and are therefore subjects for the Chinese government.
An example would be that the Chinese mining power could manipulate transaction and potentially execute a double spend attack.