Price is the Most Uninteresting Thing about Crypto Assets
In the cryptocurrency market, you need to be very careful and not always look for short-term explanations. Very often it is also a psychological factor and, ultimately, the question of exactly what period of time you are considering. If the price goes up for a long time, a correction will occur at some point. It is always difficult to associate a cost reduction with a specific event.
There is nothing special about these strong movements. We have seen this several times, in 2014, 2017, and, of course, with strong growth, there can always be a correction, especially in very volatile markets, as in the case of crypto assets.
The main factors of such a cost reduction?
It is always difficult to establish a causal relationship. But one of the important factors is some general uncertainty, especially in the field of stable coins. These are crypto assets that are tied to classic currencies such as the dollar. There are always concerns that they are not provided properly.
You need to be careful not to praise crypto assets when they grow, and not to declare everything unprofitable and incapacitated when they fall.
There are also venture capital funds that have a lot of money tied up in these markets and may now lack the liquidity to buy. And institutional investors are just beginning to explore these markets, so the purchasing power of large players there is probably still not enough.
Has trust in cryptocurrencies suffered?
This cannot be said for everyone. You have to distinguish which crypto assets you are talking about, they are structured completely differently. And you should also understand that price is probably the least of your worries. Technology is an exciting thing, and a lot has already happened.
The big problem is that these assets are still being issued for currency.
The success of cryptocurrencies does not depend on their value
Ultimately, this technology is incredibly valuable to society. We are talking about the possibility of creating databases managed by the general public, which can be controlled by anyone. The ability to issue independent assets, i.e. investments, in addition to this is an incredible innovation. Therefore, the price is rather of secondary importance. First of all, we are talking about the possibility of creating an independent, open and transparent database.
In some countries, cryptocurrencies are now considered the national currency. The crypto community is happy about this, but… Have you ever thought about what the economy of an entire country is experiencing when its national cryptocurrency loses 50% in price? Isn’t this cost reduction hurting her?
By definition, of course. If the price falls, then this is a loss for the corresponding currency. But the big problem is that these assets are still misrepresented as a currency. Bitcoin, for example, is very interesting, it can potentially remain a very interesting diversification tool, but not necessarily as a means of payment.