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Cryptographic prices continue to be confusing. For all the logics related to the demand and the offer, the reality in these days continues to be that the prices are determined by the emotion.
The fundamental news these days are mixed. For example, today's mention of Bitmain, one of the most important cryptocurrency companies, expects a deposit of a September IPO in the amount of $ 18 billion. This could also eclipse Facebook in 2012. The buzz around Bitmain is much more than just cryptography. Even so, $ 18 billion makes a strong and positive statement on investor interest.
On the other side of the digital currency, we have statements from guys like Ken White, who appears to be part of the US Treasury Bureau of Terrorism and Intelligence Finance. Last week he spoke threateningly of how the United States intends to apply its AML / KYC regulations virtually anywhere in the world. If this sounds a bit like an infamous German gentleman with an odd-looking mustache, you've got your story right.
Between these two extremes, of course, there has been a lot of information every day that is strictly correlated with the theoretical supply and the cryptography request, none of which made a difference because the prices of the encryption continue to collapse.
However, an objective view holds that there is a disconnection between what is happening in reality and the encrypted prices.
So unlike last year when prices were rising for no other reason than the fear of losing (FOMO), today they are falling in front of the fear of losing everything (FOLA). Perhaps it is fear that is the key to the future.
FOLA could be our friend
On many occasions we have mentioned how much traditional investors have used relative value. We continue to believe that global equity and bond markets are overvalued by using parameters such as price ratios and other financial measures. While quantitatively speaking, this point is absolutely right, it did not resonate. For example, from the start of the year, investors in the Nasdaq Composite have achieved a 13% gain.
This gain comes even though Facebook, the fourth largest stock of the Nasdaq Composite weighted by capitalization, was a real disaster. In comparison, during the exact period in which the investors in the Nasdaq Composite recorded a 12% gain on the road to an abundant return of 25% for the entire year. Overall, these people have had very little reason to be unhappy or fearful.
The turning point could come from Trump
Credit Datatrek to keep the pulse of the outside world under control. Here are some hints from a recent survey on the fears of institutional fund managers. The two most important issues at the end of March were: unpredictable political events in Washington DC and trade / customs disagreements between the United States and China. About 70% of respondents were very worried or worried about these problems.
Since then, things have only become more critical. The strategy of confronting Washington's international relations is shaking global currency markets. In the last two weeks the Russian ruble has lost 12% against the US dollar. At the same time, the US dollar rose more than 40% compared to the Turkish lira.
While it can be argued that Turkey is of little importance to the global monetary system, Russia is not. Turkey plays a key role in the Middle East and any instability in that area is enough to hit investors' fear that is reflected in the energy, inflation and currencies markets.
In the past, this scenario was aimed at investors on the direction of gold. This is not happening. At the time of writing this article, gold had just broken through $ 1,200 having fallen by 8% this year. Faced with the Turkish situation, this marks a loss of trust for gold in a region of the world with a close historical link with metal.
Only Theory So Far
Now if a strong correction was due to stock prices or an equally strong rally in the crypts, there would be evidence that investors would take advantage of the relative value here. Unfortunately, at this moment it is not happening. Bitcoin prices are down marginally, but sellers continue to beat most overcoins. Until this will change, the encrypted prices will be pushed by FOLA.
Featured image courtesy of Shutterstock.
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