Capital Economics economic research consultancy has said in its review that the world’s most well-known cryptocurrency bitcoin (BTC) is a bubble that has already begun to burst. The analysts noted that most people bought bitcoin, not because of belief in its future, but because they expected it to rise in price.
“Claims that cryptocurrencies will replace established fiat currencies are rubbish; our view is that Bitcoin is a bubble. Indeed, the latest price falls suggest that the bubble is bursting – although with prices still ten times higher than a year ago, they have a lot further to fall yet,” the review published on Wednesday read.
The reasons for the bubble’s burst may be further protective measures of the world regulators or a major attempt to break into the network, the analysts believe. According to Capital Economics, the current fall of bitcoin will not have a big impact on the world economy, since its capitalization is still relatively small.
According to the CoinMarketCap, Bitcoin was down 3.81 percent to $10,858 as of 20:54 GMT Wednesday after a deeper fall earlier in the day.
At the Bitfinex cryptocurrency exchange trading platform, it was almost flat at around $10,950, having recovered after drop to around $10,000 earlier in the day. Bitcoin peaked at more than $20,000 in mid-December.
Most analysts attribute the recent fall of bitcoin to news from South Korea and China, where the authorities intend to tighten control over the cryptocurrency market.