The recent market downturn reveals that the industry is entirely driven by speculation


Cryptocurrency- Confusing is the best word to summarize how cryptographic markets performed in previous weeks. Despite the excitement of the July and early August price rallies, a positive sign in an otherwise heavily bearish year, the cryptographic markets again failed their momentum and slipped back. While Bitcoin has managed to sustain above $ 6000 for the time being, many of the top ten altcoins and above have reached all the lows of the year, some of which are nearing their valuation before the explosion of end of 2017.

The result investors and cryptocurrency fans have left their heads scratching and wondered how a class of investment that already eclipses 90% of losses from the start of the year can continue to decline.

Some blame the recent emphasis on a fund traded Bitcoin exchange. While ETFs have just been mentioned during the 2017 bullfight (most of the news on that front was consummated with the launch of BTC futures) the recent narrative in the crypt has approached the obsession of the European Commission for the security and trading of a Bitcoin ETF. The biggest supporters of a BTC ETF are the same ones that continually flock around the slogan "Institutional money coming", a belief that once Wall Street and other big capital investors will turn their targets to the prices of cryptocurrency they will resume to beat historical highs. However, the net effect was an investment base focused on the news of approval of the ETF, as opposed to any discussion on the advancement and adoption of cryptocurrency.

While 2017 will be remembered as one of the most bullish cryptographic markets of all time, 2018 was much more practical in the sense that the presence of the real world of Crypto is growing. Stories of adoption that are common today would have been celebrated in the infinity only twelve months ago. It is understandable considering that the incredible price run until the end of 2017 brought a number of new investors, many of whom are found with losses> 50%, who are trying to recover their investments or find some positive effect on the enormous impact on value. However, speculation alone will not continue to drive the sector. The bubble never approached the killing of the Internet, despite the massive amount of capital that it discharged, in addition to closed societies, because the Internet proved to be a resilient and necessary technology. Most of the cryptocurrency industry finds a similar value in Bitcoin and other projects, it is only the focus that has shifted to an endless discussion on price.

The Bank of Switzerland (UBS) published a report week concluding that 70 percent of price movements within crypto markets could be classified as "momentum driven" interest speculative. The value investment has gone great as almost all the cryptocurrency communities experience the reverse reaction of positive news encountered at a declining price. Once again, the blame may in some way be linked to the general market dependence on BTC's health: altcoins rarely have an autonomous impact and are always at the mercy of the original cryptocurrency when the market lowers.

But research on the various technologies, development teams and the stories they have adopted can also be met with some degree of price derision. To give a recent example, TRON has announced a partnership with the world's most recognizable torrenting service BitTorrent only to see a price drop of 93% below the January high. Every currency is in distress and investors have no choice but to try to time the market and reduce losses. However, most of the speculation is driven by a pan-conviction in the declining market. Investors sell because they believe others will sell and the price will fall, creating a self-fulfilling prophecy that is not indicative of the health of the industry.

Source link