Is the rise of bitcoin analogous to the spread of an infectious disease? Analysts at Barclays saw enough similarities to develop a pricing model for the cryptocurrency that takes its cues from the world of epidemiology. Their diagnosis: bitcoin has probably peaked.

The Barclays model divides the pool of potential Bitcoin investors into three groups: susceptible, infected and immune. It assumes that as prices rise, “infections” spread by word of mouth. Barclays analysts led by Joseph Abate in New York explained the rest in a note to clients on Tuesday:

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.

A similar dynamic plays out with infectious diseases when the so-called immunity threshold is reached, “the point at which a sufficient portion of the population becomes immune such that there are no more secondary infections”, the analysts wrote.

The main variables determining when bitcoin price gains turn into price declines are the share of the population aware of the cryptocurrency and the share willing to invest (susceptible to infection), according to Barclays. Evidence from surveys in developed economies suggests that awareness is nearly universal and that the susceptible population is small, the analysts wrote.

While the cryptocurrency bounced back from past price collapses in 2011 and 2013, the high level of awareness this time around signals bitcoin may never return to its peak of nearly US$20 000 in December, according to the Barclays model. The virtual currency was trading at about $6 700 on Tuesday.