UBS Tech Analyst: If It’s Like Other Bubbles, Bitcoin Could Take 22 Years to Recover

Numerous cryptocurrency commentators, most of whom are “bag holders” themselves, have been fond of announcing in the press and on social media the inevitable and imminent outsize ballooning of the price of Bitcoin.

This phenomenon was particularly common during Bitcoin’s parabolic run up at the end of 2017 and during its initial doldrums in early 2018.

Four months ago, The Block writer Larry Cermak “Maybe crypto-bull contingents should consider what happens after the bubble–not every bubble that bursts recovers the old highs,” of sanguine price predictions issued by various crypto personages during the coin’s most giddy period.

Name Position Prediction for 2018 Date of prediction
Pierre Rochard Founder of Bitcoin Advisory $100,000+ December 6, 2017
Ronny Moas Founder of Standpoint Research $28,000 December 21, 2017
Julian Hosp Co-Founder and President at TenX $5,000 and $60,000 December 26, 2017
John Pfeffer Partner at Pfeffer Capital $75,000 January 9
Ari Paul CIO at BlockTower Capital $6,000 and $60,000 January 14
Kay Van-Petersen Global Macro Director at Saxo Bank $100,000 January 16
Tom Lee Managing Partner at Fundstrat Global $25,000 January 18
Anthony Pompliano Partner at Morgan Creek Digital $50,000 January 19
Phillip Nunn CEO at Wealth Chain Capital $6,000 and $60,000 January 26
Jeet Singh Cryptocurrency portfolio manager $50,000 January 28
Ran NeuNer Founder at Onchain Capital and CNBC host $50,000 February 1
Pantera Capital $20,000 April 13
Arthur Hayes CEO at BitMEX $50,000 May 15
John McAfee CEO at Luxcore $15,000 by June May 24
Nicholas Merten DataDash YouTube channel $50,000 May 27

Though none of these predictions came true for naive investors who might have acted on them, bitcoin’s recent 40% surge and concurrent optimistic clamour may be acting as a siren call to investors made wary by the last crash.

But not everyone is jumping back on the bitcoin ship at this time, Forbes reporter Billy Bambrough writes.

In fact, Kevin Deannan, “a top tech analyst at Swiss bank UBS” recently told clients in a research letter that if bitcoin is anything like other investment phenomena, it could take a very long time to ramp up to previous levels:

“The argument here is that bitcoin has gone through its bubble phase and is ready to rise phoenix-like from the ashes just as other assets and indices did in the past,”

Deannan reportedly compares bitcoin’s parabola to, “the Dow Jones in the Great Depression, the Nikkei in 1989, the Dotcom Boom and Bust, oil in 2008, and China’s recent stock market crash.”

That comparison leads Deannan to conclude:

“We’re struck by how long it took other asset bubbles to recover their peak levels (as long as 22 years for the Dow Jones Industrials) and how pedestrian the annualized returns from trough to the recovery often are.”

Like Bitcoin, all but one of the assets named by Deannan dropped 75% or more from peak levels, and only two ever achieved that level again.

In the month’s following Bitcoin’s rapid ascent to $20 000 USD in late 2017, the price proceeded drift to below $4000 USD over the course of a year.

Traders, enthusiasts, and crypto-dedicated media outlets have been eager to see dizzying prices return, but Deannan questions whether that is realistic:

“Maybe crypto-bull contingents should consider what happens after the bubble–not every bubble that bursts recovers the old highs.”

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