Is gain the sole reason that brings many crypto holders? Many of the skeptics would surely say so, while many proponents who get overly excited about major bull runs betray the risk that they are only in it for the money.
In both instances, while skeptics assert that bigger amounts are the only thing motivating crypto owners and traders, others are going to argue that more participants are encouraged. Driven by a vision of a future where governments and central banks have less power over markets and the monetary system.
So what causes a growing number of people to go into the cryptocurrency marketplace?
What causes a growing number of people to go into the cryptocurrency marketplace?
David Gerard, writer and crypto skeptic, asserts that very few crypto owners that are actually investors think with certainty that a project is likely to make a meaningful contribution to the planet, they take part, entered this world only for the numbers (gain ).
According to him, this is partially because blockchain remains an experimental and unproven technology, with comparatively little demand from the broader world.
“The majority of crypto projects fail. Even trying to pick winners here is largely professional gambling,” he added.
Even major players such as Barry Silbert, Founder and CEO of Digital Currency Group, recently said that he finds 99 percent of cryptocurrencies overvalued.
Additionally, a few of the more sympathetic to cryptocurrencies agree that’numbers go up’ is the driving force of the industry and industry today. This includes Andy Lian, Chief Digital Advisor in Mongolia Productivity Foundation, who states that most traders do what traders do — pursuing big gains in the short term. term.
“From the very beginning, the big profits brought them into the crypto market. The hype, greed, and prosperity keep them falling prey to new tokens. It doesn’t matter if the product makes sense or not, most traders look at short-term value,” he explained.
However, the OKEx Insights team highlights that trading and investing (from the long-term sense) exist side by side in cryptocurrencies, as two unique strategies.
“Typically, crypto traders have separate allocations to invest in potentially promising projects and platforms. Ultimately, the choice between trading and investing depends on personal preferences, goals as well as broader market sentiment and conditions,” stated Hunain Naseer, Senior Editor in OKEx Insights.
Others have a more nuanced view, suggesting that traders driven by short-term gains are searching to see whether a coin or project has a great, basic reason to rise. are not. Analyst and writer Glen Goodman is one of them, and he advised Cryptonews.com that cryptocurrencies have larger problems than those searching for quick short-term gains.
“The bad thing is becoming obsessed with a particular cryptocurrency and convincing itself that it will conquer the world, even if the community loses interest, its price drops,” he explained. Strong for several years and its network effect diminishes”.
Why is the cryptocurrency market ?
Assuming the bullish sentiment prevails in cryptocurrencies, you’d believe it is largely responsible for the late 2020/early 2021 bull market we’ve seen recently. However, based upon your general view of cryptocurrencies, which might not be the principal cause.
For Robbie Liu, Market Analyst in OKEx Insight, the primary driver is that the wider macroeconomic conditions the entire world sees for itself, defined in large part by “excess cash liquidity.”
“The economy is more depressed in the context of the epidemic. Without enough consumer spending and a slowdown in business expansion, money can only go into risky assets in search of profits,” he informed Cryptonews.com.
“Another important factor is that institutional investors have been gradually classifying Bitcoin as an alternative asset class since last year… These entities are also looking for diversification and greater returns in the market. hey,” additional Liu.
Such conditions lead to associations engaging with cryptocurrencies in ways they’ve never done before.
However, if quantitative easing, low rates of interest, and a surplus of money were the first drivers, short-term dealers will soon follow to add further impetus to the bull market.
“More speculative trades are made by retail investors, betting on Bitcoin, technology and growth stocks. I think some of these investors might go with the ‘number up’ traders,” Liu said.
However, Glen Goodman suggests that, in the context of large scale printing, worries about inflation and money supply are also a significant driver, not just pure short-termism.
“I think the recent bull market is driven by strong stories about the future, not just by traders looking for a quick buck. The pandemic has ushered in a new era of money printing by central banks, which has raised concerns about dollar dilution and inflation,” he explained.
Future maturity of the cryptocurrency marketplace
Looking into the future, the numbers-driven sentiment is very likely to remain a constant element for a very long time to come. For critics, this is a terrible thing, while some say it’s a essential part of the cryptocurrency’s maturation.
However, a number of other critics argue that at least a part of short-term traders will, over time, develop a longer-term sentiment, particularly as cryptocurrencies start to offer services and products. really viable service.
“The group will go into rotation mode. People who have been through ups and downs. They will understand that the market is not speculative. The ‘incremental’ group will turn to looking at the real value behind the coin or company. Then new people will take over their roles,” he explained.
On the other hand, David Gerard asserts that cryptocurrencies will never truly provide a meaningful product that has broader use or application, meaning ‘increasing quantities’ are here to stay. .
“Increasing numbers is the essence of how cryptocurrencies work; I see no signs of utility for crypto beyond this or a mature outlook,” he explained.
However, BTC users Bitcoin Beach in El Salvador might have another view, as crypto payment processors like BitPay and BTCPay already procedure countless crypto payments, in as DeFi users are experimenting with new ways to interact with a brand new, experimental fiscal infrastructure.
Furthermore, though some people in less stable nations are utilizing cryptocurrencies to protect their capital, a new global survey by Mastercard found that 40 percent of respondents are thinking of use cryptocurrencies as payment method.
Perhaps, if we consider both cost and adoption, possibly a more accurate diagnosis would be “the numbers go up”.
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