Bitcoin's wild price rise and subsequent crash has been likened to the spread of an infectious disease which peters out as more people become "immune", just like flu season.
Analysts at investment bank Barclays developed a pricing model for the cryptocurrency based on epidemiology — the study of the spread of disease through populations — which divides the pool of potential investors into three groups, "susceptible", "infected" and "immune".
"Like infection, transmission — especially to those with 'fear of missing out' — is by word-of-mouth, via blogs, news reports and personal anecdotes," Barclays analyst Joseph Abate said in a client note on Tuesday, Bloomberg reported.
"However, once full adoption is approached, the price decline is sustained and rapid.
"As more of the population become asset holders, the share of the population available to become new buyers — the potential 'host' population — falls, while the share of the population that are potential sellers ('recoveries') increases.
"Eventually, this leads to a plateauing of prices, and progressively, as random shocks to the larger supply population push up the ratio of sellers to buyers, prices begin to fall. That induces speculative selling pressure as price declines are projected forward exponentially.
"This occurs with infectious diseases when the immunity threshold is reached, [that is], the point at which a sufficient portion of the population becomes immune such that there are no more secondary infections."
In Barclays' model, the original "infected" were the 0.1 per cent of the population who first bought cryptocurrencies with an unknown long-term fundamental value, while the "susceptible" were the 25 per cent drawn in by fear of missing out.
Some people are "immune" and will never buy the asset, while even current holders are developing an "immunity" to more investment. Barclays said the main variables determining price declines were the share of the population aware of the cryptocurrency and the share willing to invest.
Awareness in developed economies is now nearly universal and the susceptible population of people willing to invest is small. Unlike bitcoin's previous price collapses in 2011 and 2013, the high level of awareness this time makes it unlikely it will ever return to its peak.
"We believe the speculative froth phase of cryptocurrency investment — and perhaps peak prices — may have passed," Abate said, adding that there may still be demand from weaker economies.
"Cryptocurrencies may have a home in low-trust corners of the global economy," he said. "Broader adoption of crypto technologies faces critical challenges and strong incumbents."
Bitcoin was at around US$6,840 ($9,298) at the time of writing, down more than 65 per cent from its December high of just under US$20,000. Bitcoin rose in price by more than 900 per cent in 2017 in an investing "mania" described by UBS as the "bubble to end all bubbles".
The total market capitalisation of all cryptocurrencies has more than halved since the start of the year to US$265 billion, according to Coinmarketcap. Barclays targeted a "generous upper bound" for the total cryptocurrency market between US$660b and US$780b, slightly under its January peak of around US$830b.