A top tech analyst at Swiss bank UBS has warned over Bitcoin return
After the recent fall of the crypto market in December 2018, the market seems to be coming back on the track and showing the signs of recovery. However, investors and analysts remained concern about the market volatility and forecasted that the recent rally Bitcoin has been witnessing might be temporary.
In 2017, Bitcoin was trading at its all-time high of around $20K. other cryptocurrencies such as Ether, Ripple, Litecoin, etc. had also seen a significant increase in their market cap. But, by the end of 2018, the market fell steadily losing more than 80% of its total gain. Bitcoin shrunk to $3000 mark from its all-time high of $20K. Ethereum, Ripple, Bitcoin Cash, Litecoin, etc. had experienced the same wash off of their gains. Currently, the crypto market seems to be getting into shape. Bitcoin is trading in the range of $5000 – $6000. Other cryptocurrencies are also moving well helping the market to get back on the track. Many believe that this resurgence in the market will remain to continue and Bitcoin may again reach the level of $20,000 or even higher.
In contrast to that belief, analyst and researchers at Swiss bank UBS have issued the warning that the rally is temporary and the recent recovery of Bitcoin doesn’t mean that it will touch the same mark again.
“The argument here is that bitcoin has gone through its bubble phase and is ready to rise phoenix-like from the ashes just as other assets and indices did in the past,” Kevin Dennean of UBS wrote in a research note to clients.
Dennean had been analyzing the previous well-known bubbles that include the Dow Jones in the Great Depression, the Nikkei in 1989, the Dotcom Boom and Bust, oil in 2008, and China’s recent stock market crash and compared them with the frequent rise and fall of the bitcoin price.
“We’re struck by how long it took other asset bubbles to recover their peak levels (as long as 22 years for the Dow Jones Industrials) and how pedestrian the annualized returns from trough to the recovery often are,” Dennean wrote. He also came to know some astonishing conclusions. For instance, he said that if the Bitcoin price movements follow the same pattern as of the Dow Jones after the 1929 stock market collapse, Bitcoin will take up to 22 years to get back on its all-time high.
“Maybe crypto-bull contingents should consider what happens after the bubble–not every bubble that bursts recover the old highs,” Dennean warned.