A Wall Street consultancy eviscerated crypto in a massive report — and it should strike fear into the heart of every bitcoin bull

FILE PHOTO: A view of Ducatus cafe the first cashless cafe that accepts cryptocurrencies such as Bitcoin on their opening day in SingaporeThomson Reuters

• Quinlan & Associates put out a massive report that should strike fear into the heart of every bitcoin bull.
• The consultancy laid out a bear case for bitcoin that puts it at just $1,800 at the end of 2018.

A Wall Street consultancy is predicting a massive crash in the cryptocurrency market this year.

Quinlan & Associates put out a report Thursday titled “Fool’s Gold: Unearthing The World of Cryptocurrency” in which they outline a case for bitcoin dropping to $1,800 by December 2018.

The 156-page report argues that bitcoin’s current price near $14,000 is far above what it is worth as both an investment asset, akin to gold, and a payment mechanism. Here’s the report:

“As an asset, we valued Bitcoin using a cost of production approach and a store of value approach, resulting in values of USD 2,161 and USD 687 respectively. To value BTC as a currency, we estimated its utilization for both legal, retail transactions payments, as well as payments in the black market. After significant testing, we calculated the price of BTC 1 to be USD 1,780.”

At its current valuation, the consultancy concludes bitcoin is a bubble “waiting to burst.” If bitcoin is not adopted as payment method, the firm predicts a major bitcoin correction to $1,800 that’ll also drag the cryptocurrency market down 70% to $223 billion later this year from its current position above $700 billion.

“‘Despite fulfilling most of the characteristics of a traditional fiat currency, cryptocurrencies are largely being utilized as speculative investment assets, leading to considerable volatility in their value,” said Benjamin Quinlan, chief executive and managing partner, in a statement shared with Business Insider.

Here’s an illustration of the consultancy’s prediction:

Quinlan & Associates

The firm’s long-term outlook for bitcoin is even more dreary. According to the report, it sees bitcoin trading at just $810 in 2020.

Still, it sees room for growth after the crash for the cryptocurrency market as a whole.

“While we anticipate valuations to decline in the short-term in response to the widespread unwinding of the digital currency space, the price of utility cryptocurrencies is likely to recover and dominate the market in the long-term,” the report said.

It expects the cryptocurrency market to rebound — driven by those cryptos with a clear utility — and reach $407 billion by 2020.

This reporter owns a fraction of bitcoin, but does not actively trade.