The fluctuating trend of the Bitcoin closely resembles that of the Nasdaq during the formation of the dot-com bubble , with the difference that this time everything is happening at a speed 15 times greater . This is the warning issued by Morgan Stanley, who underlines in a note how the price fluctuations and volumes of trading activities are a signal of how history is repeating itself.
In the report published on Monday, March 19, Morgan Stanley analysts concentrate analysis in the leap of volumes in the exchange of a cryptocurrency in particular: the token tether . It is considered more reliable than other similar rivals because it is linked to the US dollar.
According to the strategist Sheenah Shah, since its creation in 2009, bitcoin has already experienced four bearish market phases, with prices falling 28-92%. The recent 70% decline seen should therefore not be considered extraordinary. Further down is the graph in which the behaviors of bitcoin and Nasdaq are compared in the two periods taken into consideration. The volume trend, in particular, should raise concerns, according to the US bank analyst.
Since December 2017, trading volumes in the bitcoin market have increased by almost 300%. In contrast, the run preceding bear market periods saw a decline in volumes. Therefore, the increase in the exchanged parts is not to be considered an index of increased activity and concerns by the investor community, but rather a race towards the exit route.
Analyzing the data, so far there are three main currencies that are used to buy bitcoins: the US dollar, the Chinese yuan and the Japanese yen. During the last bearish phase, however, a new digital currency has blown significant market shares to the most famous bitcoins. It is a tether, a digital token that the creators claim is guaranteed by a dollar bond for each unit.
It means that the tether market is worth a dollar and this makes it theoretically more stable than the competition and less prone to excessive price fluctuations. The growing appeal of tether is interesting, according to Morgan Stanley: "in the coming years we believe that the focus of the market will be increasingly concentrated in the trade between cryptocurrencies and tokens" and that the transactions will be carried out outside the banking system.
Skepticism has grown in recent times around tether, with the company issuing tokens that has been cited in the opinion of US Committees of the Commision Trading Commission of commodity-related futures. The reserve resources amounting to $ 2.2 billion are called into question.
The problem with cryptocurrencies in general is that everything is still very theoretical , explains Morgan Stanley:
"The value of all cryptocurrencies is based on the use that can be made of them. Bitcoin is a payment mechanism, but it has not yet been used to make many payments for goods and services. The current price, therefore, reflects a future expectation of how bitcoin and its related technology can be used to make payments. "