Massive declines in daily transaction volumes are a sign of an impending perfect storm of circumstances that could lead to a general crypto market meltdown. This is the warning from economic research firm Juniper Research quoted by Bloomberg on Tuesday (October 9th). According to the study, a number of metrics within the crypto space point to a coming market implosion.
This apparent meltdown in the cryptocurrency market space is a major source of worry to stakeholders, a worry that was underscored recently with Ethereum co-founder Vitalik Buterin’s pronouncement that the days of explosive growth in the blockchain industry have likely come and gone.
Symptoms of Impending Implosion
The market is undergoing a steady decline at the moment, with overall market cap down to a 10-month low on Saturday, dropping below $200 billion for the first time since November 2017. Lodestar crypto-asset bitcoin has seen its daily transaction volumes fall from an average of around 360,000 a day in late 2017 to just 230,000 in September 2018.
According to the data presented by Juniper, Q1 2018 saw cryptocurrency business dealings amount to just over $1.4 trillion, compared with less than $1.7 trillion for 2017 as a whole, Nevertheless by the second quarter, transaction values had plummeted by 75 percent, with total market capitalization falling to just under $355 billion. This shows that market as a whole has contracted pretty fast as well.
All of this already makes for very bad reading to crypto investors and traders, but according to Juniper, the situation is not likely to change anytime soon.
Different Opinions on Market Downturn
An accompanying white paper quoted by Bloomberg states:
Based on activity during the first half of Q3, Juniper estimates a further 47 percent quarter-on-quarter drop in transaction values in that quarter.
So far, the market has failed to rally even amid strained China-U.S. trade relations and Brexit-related troubles which the researchers noted should ordinarily be prime conditions for proving the comparative advantage of cryptocurrencies’ as an alternative to traditional finance.
Not everyone shares the doom-and-gloom outlook however.
Speaking to CNBC in June, Blue Line Futures president Bill Baruch said that the prolonger market downturn is likely to be a good thing as it means that the over-the-top enthusiasm that led to unsustainable growth particularly over the christmas and new year period has now died down. This in his opinion, means that crypto markets are close to finding a bottom and transitioning into a healthier and more natural phase of market growth.