DOES CRYPTOCURRENCY HAVE A FUTURE?
So what does the future hold for this alternative asset class? As can only be expected in the cryptocurrency ecosystem, the range of views is extreme. Some see this market correction as a great time to “buy the dip”. Others believe this is the end of the party for cryptocurrencies.
Resolute bitcoiners can always find positive signs in the market and many use on-chain metrics (trading signals based on data gleaned from public blockchain transactions) to determine good times to buy.
Recently, popular metrics, including market value to realised value (MVRV – a ratio showing current versus average coin prices), suggest bitcoin is about to start an accumulation period based on past history. On the other hand, this may be an indication of confirmation bias as investors search for signals that confirm their beliefs.
Others argue this is just one more instance in a long line of bursting cryptocurrency bubbles – a typical crypto market cycle.
Comparisons with the dotcom crash of 2000 have been rife in the market, but crypto enthusiasts argue the basic premise of dotcom stocks was correct – in that the internet was the future. They believe the same is true of bitcoin, predicting that the sector will recover.
Economists have studied bubbles for centuries, however, and evidence shows many assets never recover nominal price highs after the market bubble bursts.
Some of these economists, including former US secretary of labour Robert Reich, have equated cryptocurrencies to Ponzi schemes that, unless regulated, will go the way of all such schemes and eventually collapse.
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