THE SKY IS FALLING! Run away! Bitcoin is Dying!
Well ... at least according to these researchers. Their analysis tells them that the bottom is still a long way off
https://news.bitcoin.com/bitcoin-value-to-lose-43-billion-by-years-end-researchers-argue/
But his isn't just FUD. It's good analysis. You can't call the mathematics FUD because you don't like the conclusion. Here's some dense academic verbiage about the techniques: https://www2.math.su.se/matstat/reports/serieb/2009/rep7/report.pdf
While we can't dismiss this work as FUD, what we can do is challenge the assumptions made by the authors. The Bitcoin market is so new and so volatile that analyzing it the same way you do stock markets and other well known financial systems isn't going to capture all of the nuances.
Two things that could invalidate this analysis is another rapid influx of users and the increasing adoption by institutions, hedge finds and other big investors. The increase in active users increases the network value and the big investors skew the balance of that value. This analysis makes a big assumption that user growth and institutional interests won't cause material change in the calculations. But they know this and will certainly rework their numbers as things evolve.
This type of analysis is actually a good thing. How do we value a crypto project? What metrics do we need to use? What new metrics need to be developed? This is important stuff. Maybe some mathematicians will get under our skin because their analysis doesn't say what we want. But it's important information that you should consider as you risk your hard earned money in the crypto markets.
It's FUD. I'm calling it. My **** on a block: they're wrong.
And here is why:
Their statement is merely a postulation to start with not some God given formula. The LPPLS on which it is based reads like a true academic document, and that's not a good thing. All theory, no experience, fitting the model to the data after the fact. Did you notice what WASN'T in the LPPLS document? Predictions. No predictions at all. Just like most TA aficionados, they can tell you why something happened, but only after it has happened. Before that it is a thumbsuck. LPPLS is not mathematics, it is a formula that relies on variables, a LOT of variables. Some of those variables are open to interpretation and manipulation, consciously or subconsciously. I wouldn't bother ever looking a LPPLS again. Had you linked to a document predicting the current crypto market dip at say, this time last year, I would have been impressed. As for that pdf? Someone is just trying to justify their academic position by publishing yet more rubbish for all of us to ingest. The fact that the document started out by calling itself a "law" was really all you needed to know about that paper. Cue the red warning lights when you see talk like that!
The second point in the article was Metcalfe's law and basing a drop in BTC price on that. What. The. Hell. That makes no sense.
I think that someone is trying to sound clever by mentioning a law that they do not even understand. On it's own Metcalfe's law means nothing. The effect of Metcalfe's law is proportional to the number of users of a network, in this case Bitcoin. So if Bitcoin gains more users, it becomes more valuable, and vice versa. They might as well have left the law out entirely, mentioning it is redundant.
What this means
is nothing. it means they are thumbsucking figures to fit their preconceived LPPLS notion, using that to predict a decline in Bitcoin users (good luck with that!), applying that figure to Metcalfe's law (unnecessarily), and then saying that price will drop. It's rubbish. 20 pages of rubbish, but still rubbish.
Maybe I'm wrong. So then answer me this: how many Bitcoin users are there. they have to know that - to use Metcalfe's law to give actual numerical outputs. Only BTC does not use names, just addresses, so they CAN'T know it. Not only that, but they would need to monitor active addresses. And growth or decline in number of active addresses would also immediately render their calculation obsolete.
Nice try researchers from ETH Zurich, now pull the other one, it's got bells on.
"Users" in this case is simply unique addresses.
FUD is basically made up bullshit. I don't consider this FUD because the analysis is subject to dissection. We can look at how they reached their conclusions and where we think their assumptions are wrong. It may be that they are way off the mark. But it is rigorous enough that it can be proven to be off the mark. FUD is just random hearsay.
I would argue that much FUD is carefully planned and coordinated. There is more to FUD than meets the eye. But that's an entirely new kettle of fish.