LBX Weekly Market Overview 14th August: A ride on the crypto carousel with LBX, The London Block Exchange
Crypto investors always question token prices, with Bitcoin’s price attracting the most attention as it commands the longest history. The news that ICE (NYSE) is creating Bakkt – a new exchange that will open the gates for institutional investors to buy bitcoin – along with the multiple filings for Bitcoin ETFs, are both strong positive indicators of sentiment. So why haven’t they propelled prices higher and rescued us from this prolonged winter? Similarly, why have many projects been negatively affected by this news?
Think altcoins. The first altcoins were built – and tried to improve upon – Bitcoin’s initial framework. New use cases and projects were then developed and, by 2013, there were around 40 projects – of which 10 still exist. In 2018, there are more than 1800. Altcoins were overvalued during the bull market, so now we’re experiencing investor exhaustion.
How'd we fall? The space saw an inflow of new money as investors felt they were late to the party, ergo exposing themselves to as many ‘cheap’ altcoins as possible. That worked when sentiment was positive, but altcoins later proved to be less resilient to downtrends than bitcoin. Some argue that altcoins have weaker development communities and economic incentives, hence their susceptibility to bitcoin’s volatility.
We’ve recently seen the consequences of that misguided diversification. When bulls feel confident that price will go up, they stop selling. Newcomers then increase the asset’s market value, as more demand on less supply creates upwards pressure. Since early 2018 bears have won the majority of the brawls due to less demand and the positive news hasn’t been able to overturn the negative sentiment created by the current drop. So what will be the next catalyst?
Join us at https://lbx.com/register to find out.
