Despite some experts predicting that this will be the year for Bitcoin, and it could set record highs, others have predicted that in actual fact, it will fare far worse than other assets over the next couple of months, because, in actual fact, it has no fundamental worth.
Capital Economics, which is based in London, explained that Bitcoin has been correlating with S&P 500 since its price began to fall this year. The likelihood is that Bitcoin’s value has dropped due to increased regulation thread, a ban on cryptocurrency advertising, as well as the fact that some banks have now put a stop to people purchasing the number one virtual currency with their credit cards. However, these are not the same reasons that stock prices have been hit. Capital Economics wrote;
“In other words the factors driving Bitcoin prices are still rather different to those driving the prices of other assets.”
They believe though, that as a direct result of this, that stocks are likely to fall further; however, Bitcoin will still come off worse; saying,
“Bitcoin’s correlation with equity prices has strengthened recently, but we think that this will be just temporary. We still think that Bitcoin is essentially worthless, meaning that it is likely to fare much worse than other assets in the coming months…We expect equity markets to fall as investors cotton on to the fact that rising US interest rates will slow economic growth. But the main factor driving down the price of Bitcoin is likely to be a realisation that it is simply not a credible long-run alternative to conventional currencies.”
Just a few months ago, at the end of 2017, Bitcoin was telling a different story, showing record highs of $19,000, but this has dramatically changed since, and has now dropped below $7,000 giving it the worst first quarter in history this year.