The Emerging World Of Cryptocurrencies: Behaviors, Patterns, and Paradigms Every Investor Must Know

The cryptocurrency industry is still relatively new, and as such, concepts and patterns are still emerging. As an investor, here are some vital insights you need to know.

Presently, cryptoassets’ price co-movement is quite high, most probably due to the launch of the cryptoassets market and the participants’ weak pricing ability.

Almost 7% of these cryptoassets are held by the institutional investors, which makes an almost one-thirteenth portion of the U.S. stock market’s institutional holdings ratio.

The high turnover rates of cryptoassets as compared to the traditional markets indicate that the crypto asset industry participants are either more active or reactionary.

But the UTXO (unspent output from bitcoin transactions) metric indicates that due to HODLing, these members becoming active only when the prices recover.

Reasons for Correlation

Studies have found that the low internal correlation between some of the cryptoassets can be due to three major reasons:

  • Idiosyncratic factors: These are the project-specified catalysts and news that can affect the level of correlation between cryptoassets.
  • Binance Effect: Usually the digital assets that are listed on Binance have a high correlation between them, whereas, the assets that are not listed have low correlations compared to the former.
  • Consensus Mechanisms: The consensus mechanism of cryptoassets can have a high impact on its correlation with the other cryptoassets return.

The overall correlation in the cryptoassets market has observably increased. It can be due to the gradual decrease of the market’s Bitcoin dominated trading pairs reliance or the simultaneous rise of the volume of stablecoins across all cryptoassets markets.

The correlation cycle among cryptoassets and the effect that market structure can have on this cycle is discussed further in the following:

1.Cyclic Moments and Turning Points

One of the factors responsible for the continuous fluctuation of the correlation among the USD price of cryptoassets is market irrationality. The market rationality has a similar effect as the co-movement phenomenon or herding effect.

Studies show that when the correlation among altcoins reaches a specific point, the Bitcoin trend for USD either reverse or comes to a halt at the previous price. This indicates the emergent market’s inherent traits as well as the irrational behavior of the market participants.

However, it is very early to say that there is some causal relationship between market reversals and peaks in correlation.

2.Disproportional Percentage Of Retail Investors

The frequent extreme correlation periods of cryptomarket are related to the highly retail-driven participation of the market. According to the recent data, almost 700 crypto funds are operating in today ‘s cryptomarket, but the January 2019 asset was thought to be $10 billion only.

Assuming that all of them hold only Bitcoin, the total upper bound of the Bitcoin market value will be 14% only. But if Altcoins are also included, the overall institutional proportion for the cryptoassets market can become even less than 7%.

It can be said that non-professional investors can become overtly cynical or overconfident while reacting to market trends. And that can lead to a high potential transactional volume and more volatile prices.

Whereas, crypto investors are more attentive and active towards new developments in the market, they have a significant impact on the success of their participating crypto networks and promote their voice to get heard, even through simple price action.

3.HODLing by Crypto Investors

HODLing refers to the phenomenon of the crypto investors where they prefer to HODL their assets when there is a decline in price until the prices are recovered.

And they become active when the high prices are restored. Most crypto investors tend to HODL the currency in bear markets that lead to moderate changes in UTXO cap.

But the UTXO cap decline can go steeper if the individuals transact with Bitcoin at comparatively low USD value prices. Not to ignore the fact that after a certain bear period, the rate does not go up that quickly, until at least the underlying rates reach the previous heights.

Herding behavior effects are situation specified. The initial correct information will cause a herding effect to reflect the information more quickly in the price.

Comparing this to the traditional market, the cryptoasset market has faced several issues during tits small lifetime, like:

-There is a lack of popular trading instruments of the market, an absence of a compulsory mechanism of disclosure that should be followed by all the market participants, and inadequate protection measures. All these factors lead to a reduction in the enthusiasm of the investors.

-The highly complex blockchain industry has a high barrier for new entrants. Also, there is a lack of professional and reliable media sources that leads to slow transmission of information and even extensive fake news dispersal.

-The limited arbitrage channel is another problem. The inherent limitation of cost of the mainstream coins or speed of transfer, temporary paucity of appropriate derivatives and an in-depth, and regulatory restrictions imposed by many countries lead to asset prices stymieing for a long time period in an unreasonable state.

However, the cross-exchange arbitrage chances were seen to be decreased during 2018, resulting in a higher price efficiency.

Takeaways

Because of the above-mentioned aspects, the effect that quick reacting market participants have become more distinct, making it more difficult to price the individual cryptoasset accurately.

Therefore, the herding behavior or so-called irrational attitude must not be blamed only on the inexperienced participants, but the market immaturity and infrastructure should also be on the front burner.

Especially after 2018, many regulatory bodies, media outlets, and research institutes have started to pay more attention to the blockchain industry. Also, there is a wave of crypto-native research and coverage growing with every passing day.

This rapidly developing industry has been able to attract new support and funds from various traditional and governmental capital sources and seems to continue doing so with every new step of improved data, news reliability, regulatory clarity, and less usability friction, which leads to a market with more efficient price discovery as a whole.

Various ongoing and completed researches and studies provide enough data to analyze and assess the progress of the space during the last few quarters.

As many mature financial products get rolled out, which covers the industry, there is a clearer worldwide regulatory framework, which means a rapid maturing of the crypto market than ever.

Gb Adolph Obasogie is the CEO of Harrison Global Capital

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7 Funding Options You Can Explore To Make Your Business Dreams Come True

A funding nod is a business newbie’s dream come true. With funding, you can get your business off the ground and make things happen.

Funds are the livewire of any business, and a failure to generate any could spell doom for many. There are many ways to raise funds in today’s world, and not the least, crowdfunding is a unique option to explore.

What is Crowdfunding?

Crowdfunding is a fundraising strategy for entrepreneurs and it serves to authenticate the demand for their unique ideas in the market before even starting the production.

The candidate presents his idea to the crowd who, if interested in it, invests in that idea collectively through pre-order buying, investments and even donations.

Crowdfunding is different from the traditional fundraising methods as it doesn’t focus on a single entity for the sake of investment rather multiple small amount investments are contributed by a large group of individuals.

In exchange for this support, these investors, also known as ‘Backers’ are provided with various benefits including:

  • The opportunity to pre-order the product and have the authority to give their opinion in its development.
  • A personal link to the founding team of the project.
  • The chance to become one of the early adopters of the upcoming product.
  • Exclusive offers, like a massive early discount at the product launch.

Every crowdfunding site has different features, like user base and fee, etc. but the core concept is same. You submit your proposal with a goal and deadline and then do online promotion of your campaign, usually through social media.

There are various crowdfunding sites, but we have shortlisted the 7 best of them. Take a look and it will help you to decide which site to choose for the fundraising of your next project.

1.Kickstarter

Launched in 2009, Kickstarter is the most popular and reliable crowdfunding platform to get support for your innovative ideas.

Till now, this platform has funded more than 156,000 successful projects and raised almost $4.1 billion.

It supported different projects like movies, physical products, games, etc. This is basically a reward-based platform where backers are offered exclusive incentives in return for their support. The more a backer invests, the better is the reward for them.

Kickstarter has an all-or-nothing strategy that means you are given access to your raised funds only when you achieve your first fundraising goal.

In case of failure, all the money stays with the backers. Therefore, you will find only unique and high-quality projects here.

2.Indiegogo

Another highly reliable crowdfunding platform is Indiegogo. It supports all types of projects just like Kickstarter but is different in certain aspects. Above all is its feature of the flexible funding goal.

It is up to you whether you choose a fixed funding goal or a flexible funding goal. With flexible funding goal, you will continue to get your funding even if you have not achieved your goal within the deadline.

Another unique and beneficial feature is the Indiegogo InDemand that allows you to raise funds even after your campaign has ended when you are getting ready to complete the order or are in the production phase.

3.Patreon

This unique platform is especially focused on modern creators like bloggers, musicians, cartoonists, YouTubers, live streamers, etc.

This site is specially designed for Internet personalities to run their campaigns and get support from the loyal audience through paid memberships and generate revenue.

You can choose your customers to pay on per month and get special community perks, or on per project basis so that they could give you more incentives for your creation.

If you are a regular creator and have a considerate number of online fans, then you must not delay creating a Patreon page.

4.Crowdfunder (Shopify app)

The Crowdfunder app helps you to raise revenue in its simplest form, i.e. by taking pre-orders as a method to keep your idea validated side by side and fund the production.

The platform can not only be used to raise fund for new product ideas but also help generate money for a cause, and even helps to launch old limited run-products.

If you already have a Shopify store and are willing to launch a new product, then it will be easier for you through this app.

5.GoFundMe

This crowdfunding platform is completely free but is limited for individual supports and generating money for a cause.

As the platform is used usually for personal causes so the backers tend to choose projects of their interest or within their personal networks or to which they are quite familiar.

Though this platform is not for commercial campaigns if you are a small business owner and are going through hard times, you can start a campaign to get help on a personal basis.

6.Fundable

The Fundable is associated with Startups.co and is one of the top sites that has allowed startups to provide equity or reward in exchange for funding.

Startups either offering rewards or equity is highly beneficial for fundraising purpose, as long as you have a solid business plan, a track record of growth and a pitch deck.

It charges a fixed amount of $179 per month in the duration of active campaigns, instead of a specific percentage of the funds.

7.Crowdfunder

At this equity crowdfunding platform, to create a public profile and deal room in order to invite investors you need to buy a per month plan, starting from $299 per month.

But to create a non-public profile you don’t need to pay anything. The network has more than 12,000 capitalists and investors with whom you can connect and raise the capital you desire .

Summary

Crowdfunding is just the first step towards a whole new process of convincing people and raising money for your project.

It takes a lot of effort, preparation, and luck to achieve your goals. With the options presented here, you a breath away from your funding goal.