The date of the death of bitcoin is known

Everything seems to need to be re-explained about Bitcoin, despite the popularization efforts of charitable souls and profitable entrepreneurial projects. (Photo: 123RF)

THE KEYS TO CRYPTO is a section that patiently decodes the world of cryptocurrency and its stock market, industrial and media upheavals. François Remy's mission is to identify promising entrepreneurs, decode technical progress and anticipate the industrial and societal impacts of this digital currency.

(Illustration: Camille Charbonneau)

THE KEYS TO CRYPTO. Data from the most famous blockchain offers “convincing evidence” of a coming cataclysm. An event that will send the BTC price to the ground. It would also be possible to predict the exact year. There she is.

Not content with having prematurely declared the death of bitcoin more than 500 times (there are 476 murderous declarations in English alone), the global intelligentsia now has a dated deadly prophecy.

Starting from the scientific literature according to which the formation of speculative bubbles is inherent to crypto markets, Klaus Grobys, doctor of finance at the University of Vaasa in Finland, sought to predict the evolution of the price of bitcoin known for its explosiveness. In particular to answer this “non-trivial question”: is BTC a useful tool for long-term investments?

Injecting daily data extracted from the blockchain over twelve years into a mathematical model of his own, Klaus Grobys was led to explore a working hypothesis on the life expectancy of the decentralized public network. He thus titled his study “will Bitcoin collapse around the year 2140?”, the date scheduled for the mining of the very last BTC in accordance with the rate of decline of the computer protocol.

Some researchers have previously noted that when revenues no longer cover costs, bitcoin miners may no longer have an incentive to make efforts to maintain the blockchain. A situation where we can expect to witness the fall of Bitcoin, a moment of extreme fragility already discussed by the broker turned statistician Nassim Nicholas Taleb.

An end closer than expected

With all our apologies to math enthusiasts, we will spare here the methodology for implementing the logarithms of bitcoin prices in the so-called LPPLS model (for Log Periodic Power Law Singularity) used to predict the occurrence of a singularity, a disruption of conditions with major consequences for the asset.

Klaus Grobys' projections thus support the arrival of a singularity by March 2129. Given the uncertainty surrounding the precision of the estimate, the author concedes, this remains consistent with the 2140 horizon for an upheaval in the wake of the final bitcoin issued.

But the finance doctor believes his study provides “evidence that investors who want to use bitcoin as a long-term investment would be making a mistake due to the expected arrival of a singularity in the future and suggesting an expected value of zero .”

In any case, BTC will have already fallen back to the bottom in the meantime according to “another discovery”. Its model predicts that prices will reach “a local minimum by the end of February 2045, coinciding with the spontaneous singularity of US stocks.” (Because, yes, in another study, Klaus Grobys prophesies a large-scale collapse on Wall Street around 2050).

To put a final nail in Bitcoin's coffin, the author explains that this catastrophic scenario in the not-so-distant future supports the analyzes indicating that the demand for the queen cryptocurrency arises from speculation.

“Our results appear to be contrary to the idea that demand can be driven by expectations regarding the future usefulness of bitcoin as a medium of exchange,” insists Klaus Grobys.

As an epilogue, this finance doctor from Vaasa asks this rhetorical question about whether the crypto markets, DeFi or NFTs, still have intrinsic value. And it invites future research to explore this dimension in more detail.

In the meantime, the paradox of this type of study is that through its predictions it accentuates the renunciation cost of Bitcoin, by stimulating certain investors to position themselves on this digital asset in (even more) limited edition.

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