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Using the academic angle to measure bitcoin bull and bear markets

The arrival of a bear market will have a serious impact on the related bubble electronic currency when Bitcoin prices plummet. If the bull market turns up after the market improves, there will be many irrational voices saying it is a money revolution.

On the whole, it is hard to find some professional and rational opinions, but Daniele Bianchi, an assistant professor at the Department of Finance at Warwick Business School, gives us a unique view on Bitcoin.

We heard a lot of opinions and voices when bitcoin was over $ 10,000 and there were many questions about why bitcoin was so high in a very short period of time that its price once exceeded $ 11,000. Bitcoin is now in the price adjustment phase.

How did bitcoin hit a new historical height?

Although bitcoin is now priced back below $ 10,000, it is crucial for us to know how bitcoin has hit a new heights of history. The main reason, like other fast-growing markets, is demand.

"While many are concerned that Bitcoin's bubble will burst, its prices continue to rise, and indeed the pressure of demand from investors and speculators to rapidly grow allows Bitcoin prices to hit new highs in the near future, Bianchi explains
"The bitcoin supply is constant due to the underlying agreement, so its price increases are mainly related to the rapidly growing demand."

Bitcoin is digital gold, but not digital money

Bitcoin was officially announced as digital gold when SegWit2x was canceled. Compared with bitcoin cash (BCH), this decision made by the community did not make bitcoin back on the track of paying an efficient one, which means that bitcoin is treated more as an asset.

"Bitcoin is now more like an asset than an instrument of payment, an important factor for the public and the regulator to fully understand and recognize the changes in Bitcoin prices," Bianch explains.

Demand explodes in a tiny market

Even if the market value of cryptocurrencies has exceeded 300 billion US dollars, people will still take this market value and other assets to compare. The rapid growth in demand for Bitcoin has led many to worry about this huge bubble, but everything has just begun.

"The rapid growth in demand for bitcoin can be demonstrated by the number of active wallets in bitcoin that has seen a fivefold increase in the number of bitcoin active wallets in the last five years." Similarly, from early 2017 to the present, the number of bitcoin transactions has even taken off Exponential growth, some of which is linked to the opening up of new areas of investment by ICOs as a means of funding, has resulted in huge profits that stem from the increase in bitcoin prices. "
"There are two main determinants of demand pressures: First, there is a growing understanding of cryptocurrencies by the public and investors; and second, the professionalization of cryptocurrency trading."
"The best example of this growing pressure on demand is that the Chicago Board of Futures Trading Center (CME) announces the launch of bitcoin futures trading by the end of 2017. CME has now announced Bitcoin's reference rate and real-time index," concludes Bianchi.