Bitcoin: Are Red Flags Showing Up?

Story by:  Ulysses Smith

Bitcoin (BTC) is undoubtedly the reference point in cryptocurrency. It’s not just the underlying technology that has led to revolutionary developments in the industry.  Many associated with it for its success as an investment tool in nine short years.

While the followers of BTC keep growing, including from the mainstream top-tier companies on Wall Street, fears have also abounded about its future. The most talked about issue relates to Bitcoin boom being a bubble and that it’ll soon crash.

The telltale signs point to a crypto that is losing its mojo and exclusive hold on all altcoins. If the limitations in the technological design of Bitcoin render it only as a store of value, then it will be a signal that the crypto will struggle.

Bitcoin prices have tanked since the beginning of 2018, losing more than 60% of its value. BTC is now valued at $7432, down from its all-time high of $20,000 achieved in December 2017.

Currently, BTC trades at $7432, which is -2.4% lower over its value in the last 24 hours. So, apart from the declining value, are there red flags showing up to suggest all are not well with cryptocurrency’s trailblazer?

Bitcoin search drops by 75% in 2018

It may not tell a lot, but it’s a red flag when considered alongside other factors. It has been revealed the search index for the term “bitcoin” has dropped by more than 75% since the beginning of 2018. Statistics show that the searches related to the coin actually halved over the last three months. The values are backed by research information provided by Google Trends.

According to Nicholas Colas, co-founder of DataTrek Research, this dwindling statistic was a bad signal for BTC prices.

He said that: “We use Google Trends to track search queries for ‘bitcoin’ as a proxy for potential new buyers. Bitcoin needs a new narrative in order to reestablish global attention.”

In the Google Trends data and chart information, Bitcoin’s popularity had a score of 37 as of January 1, 2018. However, that has since dropped to about 9 by June 2.

Declining transactions/ low adoption

One of the indicators that a cryptocurrency is making inroads into the mainstream is continuous adoption. Although this is a challenge for the wider cryptocurrency industry, Bitcoin could be set to face it further. Bitcoin transactions have fallen from a peak of about 400,000 in December 2017 to 200,000 in May 2018.

Bitcoin’s original idea was to provide a currency that would be not only global and borderless, but also gain acceptance. That challenge has been there, from governments and institutions out to ensure regulations are in place against the crypto.

So instead of finding acceptance and use within the common society, most users are those who intend to hide their identity or using the dark web.  As it stands, Bitcoin isn’t such a good coin for value exchange.

This is a problem and an indication that prices may not rise as expected. Improvements with Lightning Network could remove this obvious hindrance.

Increased negative sentiment

Bitcoin’s value is largely a factor of speculation and not anchored in real growth as seen above. It’s more of “irrational exuberance” related to events. Every time there are events that appear positive, prices pick an uptrend only to decline when an unfavorable one hits the market.

For most people who are investing in Bitcoin, it’s for the expectation of huge returns. With no anchor in real growth, the crypto is at risk of collapse in the event of negative catastrophes. And the increasingly negative sentiment should be a sign that the coin isn’t going to rise in value as expected.

Just the other day, prices tanked on news of advertising bans by Google. But perhaps the biggest telltale sign is when Bitcoin failed to rally after Consensus 2018. Despite having done so before, value for the leading crypto and other altcoins dropped after the conference. The allegations of price manipulation are also hallmarks of speculation, leading to more negativity and lack of adoption.

Bitcoin is still the dominant coin in the market, but signs are it might lose some of the outright dominance in the near future. It’s interesting to watch how this pans out and whether it can hold its own.

by