Moving forces cryptocurrency (Part I)
Moving forces cryptocurrency (Part ІI)
Is Bitcoin a “safe harbor”?
Recently, investors have begun to view Bitcoin as a safe asset, along with gold and other precious metals. This would have been unthinkable two years ago, but the market is maturing, and price consolidation shows that this trend is developing. However, not everyone agrees with this. The CoinDesk Cryptographic Exchange research group, in an article published last week, expressed the view that Bitcoin can only be considered a safe haven in times of crisis.
It all depends on the capabilities and position of the investor. Bitcoin can be a risky asset for venture capitalists in Silicon Valley and an asset without risk for people caught in a currency crisis. In Venezuela, for example, demand for bitcoin has risen sharply since the financial crisis and the subsequent hyperinflation. In addition to Venezuela, we can look at China. There is a correlation between the periods of weakness of the Chinese yuan (CNY) and the price of Bitcoin
When the yuan fluctuates, BTC prices tend to rise slightly. However, with respect to developed markets, most analysts agree that Bitcoin simply does not have the basis to be considered a safe haven asset. However, this does not mean that it may not become an asset without risk during or after the next downturn. Thus, Jerome Powell, chairman of the U.S. Federal Reserve, once named Bitcoin as a speculative accumulator of value. And indeed, Bitcoin seems to have a tendency to reduce volatility. The market for cryptocurrencies, especially Bitcoin, is consolidating in the second half of the year. He is less susceptible to various announcements and events, hype, fear, doubt and uncertainty. Launch of the Bitcoin FuturesBact platform has created a fully regulated market for institutional clients.
Kryptokytes continue to play an important role
Although the Bitcoin markets are becoming less volatile and more mature, some analysts have noted that the Bitcoin market is not comparable with other types of assets, as a large number of cryptocurrencies are stored in the stocks of a small group of companies called “whales”. These so-called “whales” are investors who own a large share of a certain cryptocurrency.
Mitesh Shah, founder and CEO of Omnia Markets, Inc.’s cryptocurrency analytical platform, pointed to the fact that just in one week there were several “whale” transactions around Bitcoin. In one case, nine hundred million US dollars in bitcoins were transferred per transaction, with a transaction fee of only 166 US dollars. In another case, approximately $5 million worth of bitcoins were transferred to a wallet with a transaction fee of $0.69 per transaction
Such large transactions can have a significant impact on cryptocurrencies in their own right, but these effects can easily be increased by the fact that transactions are closely monitored by cryptoinvestors around the world. Historically, such large deals have been made by whales after a long accumulation of coins bought at a low price. Whales are less prone to volatility in the Bitcoin market than in other markets. Many researchers have come to the conclusion that most of them are reliable investors and profit-seekers who are unlikely to make sudden movements. But if they do, they can have a huge impact on the price. However, when it comes to other cryptocurrencies with lower market capitalization, the whale may affect the price. They can often inflate the price of one coin only by themselves.
Demand and supply also determine the prices..ы
After all, however, good supply and demand are still perhaps the most reliable indicators of cryptocurrency prices. As in any asset class, the fundamental factors influencing the prices of cryptocurrencies are supply and demand. As we have seen in the past Bitcoin upsurges, demand has exploded and prices have risen wildly. The distinctive feature of supply and demand in the crypto-sphere is primarily based on the “market psyche”. As sentiment and optimism grow in the industry, demand for cryptocurrencies and, consequently, price increases. There are also factors that contribute to the growth of sentiment and optimism – mainly the growing support for legislation to manage the industry on a global level.
Demand for cryptocurrencies grows when financial regulators establish rules that are favourable to them. Indeed, Indexica also found that sentiment was an important factor in price indicators: according to Bloomberg, “Bitcoin’s strongest prognostic measure was its quotability, which showed that it was most often talked about in combination with more traditional currencies. In other words, Indexica found that the frequent references to Bitcoin, and the contexts in which it was mentioned, were important indicators of BTC prices.