The cryptocurrency market has had a terrible run this year with Bitcoin prices down by 50% since its value in November earlier this year. A $700 billion of the market cap has been wiped out and the prevailing bear sentiments are taking a toll on the investors’ sentiments. The slump has only emboldened the crypto detractors many of whom have already written the obituary of the digital currency market.
Is there any hope?
However, all is not doom and gloom even amidst this trying time. Bitcoin has faced such hardships before and more importantly, it has managed to recover from such situations. A research conducted at Cambridge Judge Business School finds that cryptocurrency market is likely to bounce back in the future. Providing their inputs to the second crypto asset benchmarking study, researchers from the business school emphasize the fact that the cryptocurrency is going to stay here and it is not uncommon for people to comment negatively about future of the digital asset industry. The researchers noted that despite the 2017 bubble which is largest in the history of cryptocurrency, the market cap of Bitcoin and the whole cryptocurrency ecosystem is still more than its Jan 2017 levels – after which the economic bubble started.
The study noted that the speculation about the death of the whole digital currency ecosystem has been largely exaggerated which can potentially affect the market sentiments and delay expansion plans of the stakeholders. Interestingly, in spite of the relentless devaluation, Bitcoin still manages to garner support from wide array of investors though there are others who have written it off. According to 99bitcoins tracking website, the Bitcoin has been branded dead by over 300 times.
Users number evoke confidence
The research also found that the crypto market has added millions of new users to its database over the last year although most of the users are passive in nature – buying the cryptocurrency with new wallet but not moving, exchanging, or using them. A total of 139 million users’ accounts are registered with crypto service providers, out of which at least 35 million users have a verified identity. The number of verified users has quadrupled in 2017 and again it has doubled in the first three quarters of 2018. Out of the total user database, 38% of the users are considered active although there is no consistency in the criteria and standards of being considered active across the different service providers.
Energy consumption challenge
The study has also delved into electricity consumption by the cryptocurrency facilities, revealing that top six digital currencies collectively accounts for 52 – 111TWh electricity consumption per year, translating into less than 0.001% of the world’s total energy production. The report noted that a considerable share of the energy consumed by these facilities come from the renewable sources of energy and from the regions which have excess capacity. Also contrary to the popular belief, the study found that crypto mining is less concentrated in hashing power, manufacturing options, or geographies.