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Bitcoin rose this week, driven by remarks made by Federal Reserve Chairman Jerome Powell on digital currencies and renewed hopes for a new stimulus deal.
The price of bitcoin has soared above $ 12,000 per bitcoin for the first time since mid-August and has been pushing its highs since the beginning of the year. However, the bitcoin rally failed to boost other major cryptocurrencies, including Ethereum, Ripple’s XRP, litecoin, chainlink.
Now, researchers have identified what’s really driving bitcoin and cryptocurrency prices, finding conclusive evidence that there are fundamentals at play that can be quantified.
Bitcoin and cryptocurrency prices are hard to predict, but researchers have been trying to find out … [+]
SOPA / LightRocket images via Getty Images
“Despite what Donald Trump may think, the price of a cryptocurrency does not come out of nowhere,” bitcoin and cryptocurrency market data analysts The Tie wrote in their report, pointing to US President Trump’s 2019 tweet that mocks bitcoin and cryptocurrencies. “Rather, there are real and tangible driving forces that determine the price of a digital currency.”
“What we are trying to show is that cryptocurrency models are not that different from stock markets, even if the opportunity is much greater,” Josh Frank, founder and CEO of The Tie, said on the phone.
Bitcoin’s price has been trading broadly in line with equity markets in recent months, with massive government stimulus measures boosting assets across the board.
“Bitcoin and Ethereum’s reaction to adverse news is not as pronounced as it was,” Frank said, pointing to Wall Street’s increased participation in the bitcoin market and arguing that bitcoin critics, such as JP Morgan CEO Jamie Dimon “are unable to move bitcoin prices as they once did.”
However, the price of smaller cryptocurrencies can still be significantly shifted by events The Tie has called “significant developments”.
“Wall Street doesn’t trade much with EOS and Tron and anyone in the asset class can benefit from the kind of data we collect,” added Frank.
Some observers of the bitcoin and cryptocurrency market expect smaller cryptocurrencies to eventually move similar to the more established bitcoin and ethereum.
“Bitcoin and ethereum are the gateway to cryptocurrencies,” said Guy Hirsch, US chief executive of the brokerage eToro, which has a partnership with The Tie, speaking on the phone.
“Wall Street’s interest in the altcoin market is growing, bolstered by the allocation of capital to bitcoin and ethereum. There are billions of dollars being poured into decentralized finance (DeFi) that will create stable decentralized products that will create a completely market. new”.
The researchers found that announcements of new funding for a project, as well as mergers and acquisitions, are most likely to have a positive effect on prices that often extend beyond a week, showing a 90% chance of a positive return after a week, averaging 8.23% in returns.
The price of bitcoin has risen 7% in the past week, with researchers finding that bitcoin is lower … [+]
Coinbase
Elsewhere, while being listed on a new exchange increases demand on a cryptocurrency, such events do not translate into sustained price increases. Likewise, token burns – the permanent removal of existing cryptocurrency coins from circulation by the creator of the cryptocurrency – produce the most consistent returns over a 24-hour period with a 100% probability of an average rise in the price of the currency. 2.13% over the day, but these gains are only temporary.
Additionally, analysts report that regulatory announcements have a greater effect when they come from print outlets, while airdrops, a type of crypto distribution in which free coins are sent to multiple digital wallets, are better supported by Twitter activity.
“On the contrary, and unsurprisingly, 51% attack [where a single entity or organization is able to control the majority of a cryptocurrencies computing power, potentially causing a network disruption] show the lowest odds of producing positive returns, “the report reads, with such attacks causing a token to lose value 80 percent of the time over the next seven days.
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