3 Seemingly Unrelated Stories That Impact Cryptocurrencies

Author: Kasi Bowen
Date: 
January 19, 2019
Read time: 
3 minutes

Cryptocurrencies can rightly be described as tricky in any number of ways, but perhaps most of all they’re tricky in that we can seldom predict what will affect the prices. While we can typically draw lines from news headlines to price fluctuations after the fact, cryptocurrency is very difficult to gauge in advance. It’s a brand new category of financial assets that the world is still getting to know, and its decentralized and largely unregulated nature make it something of a rogue commodity when it comes to analysis.

Cryptocurrencies can rightly be described as tricky in any number of ways, but perhaps most of all they’re tricky in that we can seldom predict what will affect the prices. While we can typically draw lines from news headlines to price fluctuations after the fact, cryptocurrency is very difficult to gauge in advance. It’s a brand new category of financial assets that the world is still getting to know, and its decentralized and largely unregulated nature make it something of a rogue commodity when it comes to analysis.

This means it’s generally a good idea to think broadly when analyzing cryptocurrency, and one interesting realization this leads to is that a lot of seemingly unrelated stories can actually impact cryptos as much as those that would seem to be more direct. To illustrate this point, consider a few examples.

 

1 - Stock Market Crashes

It actually remains to be seen how much a stock market crash can impact the crypto market, or if it will at all. However, with several predictors out there forecasting a 2019 crash, we may be about to find out. The logic is actually quite clear because it has precedent in other universal commodities - namely, gold. That logic dictates that when the markets crash and stocks and traditional assets become less reliable, alongside potential currency deflation, investors will buy up independent commodities that are less affected. Then, as more and more investors do so, those commodities can actually prove profitable, rather than just stable. Cryptocurrencies are often compared to gold and silver in that people believe they might operate as this sort of haven in the event of a crash. This may not ultimately be the case, but it’s a reason to keep stock market swings in mind when analyzing cryptos.

2 - Opening Betting Markets

Casinos and betting markets can be somewhat obscure to those who don’t directly partake, but they actually conduct sensationally strong business. And increasingly, some of that business is handled via cryptocurrency transactions. For this reason, you’ll find betting and gaming platforms that carry their own guides to cryptocurrency, so that new customers can understand it and thus place bets and play games with it. For this reason, any newly opened betting markets or newly legalized areas for casino gaming are worth keeping an eye on in gauging potential boosts in crypto demand and pricing. For instance, there are many who believe the U.S. market could be about to grow in a big way, with sports betting legalized and some states gradually working on casino regulation.

 

3 - Rising Carbon Dioxide Levels

This is a perfect example both of a type of story that initially seems completely unrelated to cryptocurrency, and of the fact that not all of these are positive. In the past year or so we’ve started to hear a lot more about the massive amounts of energy used in bitcoin and crypto mining, and it’s now estimated that this process, on a global scale, can be more of an energy drain than actual mining. Some have even suggested that crypto mining alone might negate our efforts to combat climate change. Further headlines in this space, if backed by research or simply if they’re alarming enough, certainly have potential to tamp down the demand, and thereby the prices, of cryptocurrencies. 

 

Again, we are still learning what all impacts the crypto market, and how to do this sort of analysis. These are merely a few examples of the seemingly unrelated issues that can play into the whole conversation.

Posted by Kasi Bowen

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