By Ali Qammar
As the year started, Bitcoin experienced a drop in price by more than 60%. At the same time, another Bitcoin figure (less-noticed though) also plunged: the number of daily transactions.
There are many explanations for the fall in trading, but it is less understood as to why the level since then has not come back to normal or even made an improvement, as Bitcoin’s price already made a 50% comeback as of February 5th this year.
Understandably, this situation has left some of the investors to wonder whether the cryptocurrency is losing popularity.
Furthermore, on average, the daily trades recorded have roughly dropped by half the December levels, and last month touched the lowest in two years. That happened even after Bitcoin becoming a household name and gaining back over $10,000.
According to chief investment officer Charles Morris, of the Newscape Capital Group, who heavily invests in cryptocurrencies, it could spell bad news for Bitcoin bulls.
He says that purchases and trading on the Bitcoin network measured by metrics such as transaction volume, is indicated by the price direction.
Besides, via phone while in London, Morris (who works on projects to facilitate price discovery at a large scale in various cryptocurrencies) said that they had a hype-cycle which is currently cooling down.
He added that we perhaps could be entering into a bear market for Bitcoin.
According to Blockchain.info research, the transactions dropped from almost 400,000 in mid-December on an average of seven days to around 200,000 by this week. The currency was trading below $500 last time when it was as low as this.
All transactions waiting for official recognition by the Bitcoin network utterly fell from an average seven-day 130 million bytes in early January to 35 million currently.
Confirmation times for average transactions has fallen too, although, this kind of delay is being addressed by the underlying tech Bitcoin has been adapting. For instance, Coinbase (one of the largest cryptocracy exchanges based in the US), activated a software enhancement by the name SegWit protocol, which changes the manner in which data gets stored on blockchain, just last week.
But even so, it is more likely only a matter of time before traders get back when prices get up again. David Drake, who has invested $10 million in blockchain and cryptocurrency, sees the currency getting to $35,000 by the end of the year.
He said there is a legacy of transactions getting expensive and slow which takes some people time to forget, but went on to say that the individuals will be back.
Websites that only allowed their payment in Bitcoin, according to Kyle Samani, crypto hedge fund Multicoin capital partner, now accept a wide range of digital currencies. That’s making the alternative currencies appealing and resulting in lowering Bitcoin popularity.
In addition, he went on to say that payment processors, online gambling, and merchants are actually pulling out of Bitcoin indicating a failing process for Bitcoin.
