Bitcoin Will Fall: Experts at Capital Economics Warn

The recent plunge that Bitcoin has experienced prompted several experts to comment on the situation and provide their two cents of what might happen in the future.

Among those are economists from Capital Economics—a company that specializes in macroeconomic research—who wrote a note providing their insight into Bitcoin’s future.

The note started out by saying that any claims that cryptocurrencies could be used as substitutes for fiat are “rubbish”.

“Most people are buying Bitcoin, not because of a belief in its future as a global currency, but because they expect it to rise in value. Accordingly, it has all the hallmarks of a classic speculative bubble, which we expect to burst. Triggers for the bubble to burst could be a further crackdown by regulators or a major hacking attempt. When it will fully burst is anyone’s guess and prices could yet rise again, before they fall further ahead,” they said.

This note comes at a time when turbulence in South Korean politics is severely affecting the price of Bitcoin.

Uncertainty behind the fate of the country’s exchanges has given pause to investors who do not know if their holdings will be tradeable by the end of the week.

South Korea’s Financial Services Commission spoke in Parliament earlier today, saying that the government “is considering both, shutting down all local virtual currency exchangesor just the ones who have been violating the law.”

Capital Economics may not have much faith in the future of cryptocurrencies, but it believes in blockchain technology’s potential in transforming the financial system in other ways.

“It could [also] have applications elsewhere, for example, in maintaining tax and hospital records,” the note concluded.

Regulations and hacking have certainly given Bitcoin a beating in the past, but it appears to be robust enough to survive the onslaught of legal hoops.

We’ll have to wait and see whether Capital Economics’ warning comes to fruition this time around.