Bitcoin’s Bull Market ‘May Have Come to an End,’ Says MRB Partners

The rally in bitcoin (BTC) over the past year may be nearing an end, according to New York-based MRB Partners, a boutique investment research firm.

In a May 25 report titled, “Has The Crypto Fever Broken?“, the analysts cite growing concerns with cryptocurrencies’ environmental impact, possible regulatory risks, negative technical trends and a future reduction in monetary stimulus as among the many reasons bitcoin could have a tough time ahead.

“Easy money has helped fuel the crypto bubble, and a slow unwinding of this trend globally will ultimately become a headwind for the speculative digital asset,” wrote MRB.

Bitcoin has nearly doubled in price over the past year and is up about 30% year to date. The world’s largest cryptocurrency by market value suffered a volatile period in May, which appears to be stabilizing over the short term. However, some analysts expect limited upside in bitcoin despite the possibility of a brief bounce.

Bitcoin’s Bull Market ‘May Have Come to an End,’ Says MRB Partners
Chart shows an estimate of the annual electricity consumption of bitcoin which coincides with price peaks.
Source: MRB Partners
  • MRB mentioned concerns about environmental issue, leverage and renewed fears of a global regulatory crackdown in the U.S. and China as possible headwinds for cryptocurrencies.
  • To reduce the negative environmental impact, “crypto mining systems would need to allow miners to produce tokens for significantly less cost compared to their current price,” wrote MRB.
  • Increased mining efficiency could lead to lower energy consumption, which typically occurs during corrections in the price of bitcoin, according to MRB.   
  • Moreover, overleveraging “has also become a mainstream issue for crypto markets and regulators are now being tasked with gauging the risks originating from increased non-financial intermediaries/exchanges.”

But not all may not be lost for crypto markets, according to the researchers.

“It remains entirely possible that these assets could develop into a mainstream investment vehicle,” wrote MRB. “We suspect this process will be a very long road ahead with more boom/bust phases along the way.”