They have based it on Metcalfe’s law which says at this point that Bitcoin could lose another 27%. The group also cites the part I agree with, in that so far cryptocurrency prices are mainly driven by Bitcoin which means Altcoins (other than Bitcoin) have risen and fallen in direct correlation.
Where I am not sure if I agree or disagree is their theory that a lot of this is driven by fear in the news. While I am sure it is, if the fear is unfounded why should bad news reflect on the long-term valuation?
A sensible market would be wise to react to say the hacks that have happened to Ethereum or the fact that illegal content has been inserted into the Bitcoin Blockchain. That is bad news that has relevance since these issues potentially threaten the integrity of the entire blockchain.
While we’re on the topic of Metcalfe’s law, since cryptocurrency is a completely new and largely irrational market can we trust this is a valid predictor? I am not aware that any other traditional models have successfully called any of the major events in cryptocurrency.
I do agree it was time for a significant correction but the same has happened in commodities and stocks before, yet the stock markets keep moving (albeit with a lot of money printing and manipulation-is that what regulators mean by regulation for cryptocurrency? ).
Only time will tell where things head but I do think that currencies that are efficient, secure and easy to use will stand the test of time (which admittedly are very few and I cannot think of a single one that solves all of the issues just yet).