Three predictions and a mathematical model after a first quarter of nightmare

The collapse of more than 50% of bitcoin between January and March follows a pattern that aims to drain another third of its capitalization before the end of the year

The first quarter of 2018 has passed into the brief but intense history of bitcoin as the worst start to the year of cryptocurrency since Satoshi Nakamoto made his creation public, in 2009. With 50% erased from its price since January, the market debate between getting carried away by a deserved rebound or continuing to drain funds from the queen of virtual assets. A general indecision does not help the disparity of opinions between theorists and analysts about the fate of the cryptographic currency in the coming months.

While some analysts say that bitcoin will end the year comfortably exceeding the historical highs of December 2017, at 20,000 dollars, two mathematicians from the ETH university center in Zurich have published a study that predicts the opposite. According to the pattern they have found in the behavior of the volatile 'crypto', not only the 'crash' of this 2018 was predictable, but also that of Nakamoto will lose another third of its market value before December 31.

It is not the only negative prediction. At a time when the indecision of recent weeks persists, investors are choking on an uncertain landscape in which it is not clear what will come next. What seems to have confirmed the second worst quarter in the history of bitcoin - only surpassed by performance in the third quarter of 2011, when it lost 68% -, is that we have gone from the "irrational exuberance of 2017 to a new situation of minimum, "says Charles Hayter, co-founder of CryptoCompare. Or what is the same, and in terms of technical analysis, of a trend of "increasing maximums and minimums, to a new one of decreasing highs and lows", rounds to 'Market Watch'.

The negative environment that has shaken the 'crypts' from January to March persists in this April start. During the past months, it has been distrust in the infrastructures of the virtual currency exchanges, which have suffered repeated attacks, together with the regulatory pressure and the prohibition of the advertising of cryptoactives in the giants of the Internet and social networks which has dented the appetite in this market.

None of these situations has loosened. The failures and computer attacks of the exchange platforms are the daily bread and the world authorities continue making normative threats, without deciding to fix, once and for all, a definitive framework for exchange houses and ICOs. As for the prohibition of advertising, it only feeds the general uneasiness about what was a promising bet.

4,000 DOLLARS BEFORE 20,000 OR 30,000

In this context, the optimism of some analysts and investors contrasts sharply with the acute pessimism of others. On the one hand, the well-known bitcoin bull, Tom Lee, of Fundstrat Global Advisors, keeps betting that he will change hands above his historical peak of $ 20,000 by mid-year. "Later in 2018 we see positive catalysts for bitcoin," he says in a note to clients, which leads him to increase his forecast for December, when he expects to change hands at $ 25,000.

Moreover, he dares to give a date: April 15. From then on, the bitcoin will rise because "sales have been exacerbated by the tax season in the US," says the expert of the investment fund of New York. It will not be like that for the 'altcoins' since Lee does not see the potential for increases until August.

Even longer is the chairman of the investment firm LDJ Capital, David Drake, which places the Nakamoto in 30,000 dollars at the end of the year. These buoyant prices will only be possible, says Jani Ziedins, of Cracked Market, if before bankruptcy with desire the minimum of February in the 6,000 dollars.

It is the condition that the expert believes that the virtual currency will meet in the coming weeks before any significant rebound occurs in the most operated of the 'crypts'. When this occurs, "a wave of sales will take off that will bring the price up to $ 4,000," Ziedins says.

CAPITALIZATION AT 70,000 MILLION AT THE END OF THE YEAR

These forecasts are based only on the laws of supply and demand of the market, but do not take into account other variables, such as the number of users in bitcoin. A magnitude that is slowing down, according to the 'Law of Metcalfe', and which highlights that capitalization does not grow as fast as it has done in the past.

Not only that, according to the mathematical model of the researchers Spencer Wheatley and Didier Sornette of the Federal Polytechnic School (ETH) of Zurich, which proclaims that the value of a network is equal to its users squared, the accumulated of the first virtual currency of the world will lose another third by the end of the year, when it will barely surpass 77,000 million dollars.

Currently in 115,000 million dollars, in the first three months of the year this measure has also drained more than 50% -nearly 60% from the January highs of 285,000 million dollars-, according to data from CoinMarketCap. In a market that has stagnated between 250,000 and 300,000 million 'greenbacks', the dominance of this asset over the rest of 'altcoins' remains above 45%, well above the historical lows of 33% of the month of January. Following the pattern of Wheatley and Sornette, it is not difficult to predict that the total value of the almost 1,600 tokens and existing assets will be closer to 160,000 than to 200,000 million dollars between now and December.

THE BURBUJA HAS EXPLODED

Professors at the Swiss university center also believe that the bitcoin price action follows a pattern by which the sharp correction from January to March could have been anticipated. Based on another model that predicts speculative bubbles, the study identifies four phenomena of exorbitant growth of prices between 2011 and 2017, followed by a "market crash".

From the hacking of the extinct Mt. Gox to the panic unleashed by the scrutiny of US regulators and the Asian markets of South Korea and Japan in December 2017, mathematicians defend that each bubble has followed an event that has unleashed " a deep and sustained correction. "

And at the present time, the rectification will be proportional to the increase. For this reason, although the bulls argue that once the regulatory landscape is clarified and based on the potential of the blockchain, the price will increase again, experts at the ETH Zurich believe that 2018 will be the year of the great correction.

After all, 50% of the first quarter -60% of maximum to minimum- that the bitcoin has lost after the 1900% increase experienced in 2017 is a tiny rectification. The market crash of 2013 left a correction of 91%, after a boom of more than 1100%. For this reason, academic researchers say that the mathematical analysis of the bitcoin price action shows a predictable path and makes it easier for investors to monitor this volatile asset, to prepare for the future and not fall back into new bubbles.

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