The investment mania for cryptocurrencies is like an infectious disease whose transmission rate may be declining, Barclays said on Tuesday, concluding their combined market capitalisation has probably already peaked. Cryptocurrencies hit a collective value of close to $800 billion in December and January, when prices jumped.
Since then a sharp selloff has left them with a capitalisation of around $260 billion, according to Coinmarketcap.com, $115 billion of that being in the biggest and best-known cryptocurrency, bitcoin.
The combined figure was unlikely to climb back beyond a range of $660 billion to $780 billion, the British bank said in an analysis, with any long-term demand for cryptocurrencies coming from "low-trust" sectors of the global economy.
Barclays based its findings on a model that compared crypto-hysteria to "the spread of an infectious disease" through a population of investors. The bank divided them into three groups: "Infected individuals, susceptible individuals who are vulnerable but not yet infected and those who are immune," said Marvin Barth, head of global FX strategy.
"Like infection, transmission is by word-of-mouth, via blogs, news reports and personal anecdotes," he told journalists. The bank said that former cryptocurrency holders were developing "immunity to further investment."
Comments
Comments are closed for this article.