Cryptocurrencies will experience a "heavy correction" of 90% leading to a "mass-market wipeout," a technology investment bank predicted in a report seen on Wednesday.
GP Bullhound's "Token Frenzy: The Fuel of the Blockchain" report laid out the current state of cryptocurrencies, blockchain technology, initial coin offerings (ICO) and what they think the future will look like.
One prediction is that cryptocurrencies will experience a 90% correction within the next 12 months with "very few companies" surviving.
Sebastian Markowsky, a director at GP Bullhound, and main author of the report, explained that institutional investors are likely to come into the market and drive the price higher. More retail investors will get in to the market too, buying cryptocurrencies at elevated prices. As the market begins to see sharp falls later this year, it will exacerbate the selling causing "panic" and the eventual correction.
There are over 1,000 cryptocurrencies on the market with many new ones being created all the time. Bitcoin still remains the biggest by market capitalization, followed by ethereum and ripple. After hitting record highs at the end of last year, these cryptocurrencies suffered large falls in the first quarter of 2018, but have slowly started to recover.
The value and fate of cryptocurrencies has been fiercely debated over the past year. Noted economist Nouriel Roubini predicted that bitcoin would crash to zero. Warren Buffett has also struck a pessimistic note on cryptocurrencies.
"In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending," Buffett told the media in January.
Experts suggest that there are a number of factors that could drive prices higher this year, but admit the behavior of investors will ultimately still determine the price.
Still, there are a number of voices that are still bullish on cryptocurrencies. Thomas Lee, co-founder and head of research at Fundstrat, said that bitcoin could hit $25,000 U.S. this year, which is 172% upside from Wednesday's high of $9,182.43 U.S.
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