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Fundamental drivers of the cryptocurrency market

  • #61
  • Aug 7, 2019 3:17am Aug 7, 2019 3:17am
Here is an excellent article titled Modeling Bitcoin's Value with Scarcity. https://medium.com/@100trillionUSD/m...y-91fa0fc03e25

Scarcity can be quantified by SF.

SF = stock / flow

Stock is the size of the existing stockpiles or reserves. Flow is the yearly production.
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  • #62
  • Aug 7, 2019 7:13am Aug 7, 2019 7:13am
I think some of the fundamental drivers of Crypto markets are similar to that of Gold. Both having no Yield and thus ever falling Global bond yield is great news for BTC and crypto in General. As I type, US 10-Y yield is near all time low while the German 10 year bund yield is near -0.60%, also all time low!
  • #63
  • Edited 8:07am Aug 7, 2019 7:55am | Edited 8:07am
I always thought the "Coinbase effect" was interesting... basically it says a coin will rally when Coinbase announces they'll list it. They just announced Dash on Aug-5 to be listed, and here's a little rally, albeit shortlived:
Attached Image

In my opinion it seems the "Coinbase effect" is becoming more and more muted.
  • #64
  • Aug 7, 2019 8:08am Aug 7, 2019 8:08am
Quoting Cryptobuzz
I think some of the fundamental drivers of Crypto markets are similar to that of Gold. Both having no Yield and thus ever falling Global bond yield is great news for BTC and crypto in General. As I type, US 10-Y yield is near all time low while the German 10 year bund yield is near -0.60%, also all time low!
I don't think it really reacts to inflation and jobs numbers like gold does, though... right?
  • #65
  • Aug 7, 2019 11:40am Aug 7, 2019 11:40am
Quoting cityRat
{quote} I don't think it really reacts to inflation and jobs numbers like gold does, though... right?
Nah...Not to those numbers. Just that crypto space tends to move on rates and money supply.
  • #66
  • Aug 9, 2019 2:28am Aug 9, 2019 2:28am
I believe pure speculation is the fundamental driver at the moment.
  • #67
  • Aug 9, 2019 2:13pm Aug 9, 2019 2:13pm
Quoting WolfofCrypto
I believe pure speculation is the fundamental driver at the moment.
Agreed. It is hard to find market fundamentals to base pricing on. However, the market does exhibit common trader behavior that can't be denied. So, a lot of the same tricks of the "trade" can be used in this market as in others like forex, metals and others.
  • #68
  • Aug 9, 2019 6:26pm Aug 9, 2019 6:26pm
Wondering if such metrics as hash rate and average number of transactions per block may be considered fundamental.
  • #69
  • Edited 4:37pm Aug 10, 2019 5:38am | Edited 4:37pm
Quoting yg10
Wondering if such metrics as hash rate and average number of transactions per block may be considered fundamental.
Most definitely. In the 1980s, Robert Metcalfe, the inventor of Ethernet, proposed a formula:
The value of a network is proportional to the square of the number of connected users of the system (nē)

Since it is difficult to determine every single active unique wallet address, some look at total network transactions.
https://www.blockchain.com/charts/n-...l?timespan=all
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  • #70
  • Aug 12, 2019 8:51am Aug 12, 2019 8:51am
Quoting WolfofCrypto
I believe pure speculation is the fundamental driver at the moment.
I don't think so. Each and every asset class has some fundamental drivers behind the market, although the fundamentals driving BTC are complex and not easily understood. One of the fundamentals could be viewed an alternative asset class like precious metals. Other fundamentals depend on hash rate and bitcoin mining etc.
  • #71
  • Aug 12, 2019 8:53am Aug 12, 2019 8:53am
Quoting TMR
{quote} Most definitely. In the 1980s, Robert Metcalfe, the inventor of Ethernet, proposed a formula: The value of a network is proportional to the square of the number of connected users of the system (nē) Since it is difficult to determine every single active unique wallet address, some look at total network transactions. https://www.blockchain.com/charts/n-...l?timespan=all
Specifically, at the rate of change of transactions? How can you use as an indicator?
  • #72
  • Aug 12, 2019 8:53am Aug 12, 2019 8:53am
Quoting TwoSense
Fundamental drivers of the crypto market are tough to figure out sometimes. When the market has momentum in either direction, it's usually the pendulum swinging too far in one direction. During the corrections where cryptos pull back over 90%, it's usually fear driven. That's when triggers that cause crypto prices to drop have a bigger impact. On the other side of the spectrum, when the markets are rallying there's what Alan Greenspan would call irrational exuberance. Plenty of it. During those rallies, positive news will impact crypto prices more...
Very interesting chart. Thanks for sharing
  • #73
  • Aug 12, 2019 10:20am Aug 12, 2019 10:20am
Quoting MarkGman
{quote} Specifically, at the rate of change of transactions? How can you use as an indicator?
Price valuation. (number of transactions per day)^2 = approximately market capitalization
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  • #74
  • Aug 12, 2019 12:00pm Aug 12, 2019 12:00pm
Quoting TMR
{quote} Price valuation. (number of transactions per day)^2 = approximately market capitalization
Thanks TMR, that's an interesting way to value crypto.
  • #75
  • Edited 11:27pm Aug 12, 2019 11:11pm | Edited 11:27pm
Attachment g
Quoting TMR
{quote} Most definitely. In the 1980s, Robert Metcalfe, the inventor of Ethernet, proposed a formula: The value of a network is proportional to the square of the number of connected users of the system (nē) Since it is difficult to determine every single active unique wallet address, some look at total network transactions. https://www.blockchain.com/charts/n-...l?timespan=all

Yes, but I meant somewhat different.
Hashrate reflects the cost of coin production (for PoW coins). Blockchain reacts to changes in hashrate adjusting the computational difficulty for mining so that time for finding new block remains constant (10 minutes between blocks and 2016 blocks or 2 weeks for difficulty adjustment for Bitcoin).

Below is hashrate chart for last 2 years. We can see that it made a local minimum in January and keeps growing since then.
Attached Image (click to enlarge)
Click to Enlarge Name: Screen Shot 2019-08-12 at 21.14.11.png Size: 154 KB
  • #76
  • Aug 13, 2019 3:52am Aug 13, 2019 3:52am
I'm in 100% agreement that the network hashrate is a fundamental driver and a relevant valuation of the market. That being said, the Bitcoin network reached an all-time hashrate this month.
Attached Image (click to enlarge)
Click to Enlarge Name: Capture.JPG Size: 78 KB
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  • #77
  • Aug 21, 2019 3:04am Aug 21, 2019 3:04am
Quoting TMR
That being said, the Bitcoin network reached an all-time hashrate this month. {image}
The hash rate hit another all time high of TH/s: 82,514,505 on 8/19/2019.
Attached Image (click to enlarge)
Click to Enlarge Name: Capture.JPG Size: 73 KB
  • #78
  • Aug 21, 2019 3:49am Aug 21, 2019 3:49am
This will make for some good reading over the weekend......kudos
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  • #79
  • Aug 21, 2019 5:56am Aug 21, 2019 5:56am
Quoting TMR
I'm in 100% agreement that the network hashrate is a fundamental driver and a relevant valuation of the market. That being said, the Bitcoin network reached an all-time hashrate this month. {image}
Hashrate is crypto 'traffic' after all.
Considering that 1000 addresses hold 80% of the total crypto (Chinese and Russian mamouth mining plants included),
that could mean only inside traffic between them ...
Anyway, it can't be any meaningful relation between price and hashrate. Hashrate might keep going up while price going down or stagnate.

I'll stay wittha price as the most relevant valuation of the market.
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  • #80
  • Sep 4, 2019 7:55am Sep 4, 2019 7:55am
Quoting TudorIoan
{quote} Hashrate is crypto 'traffic' after all.
Incorrect. Confirmed transaction would be the network "traffic" not the Hashrate. https://www.blockchain.com/charts/n-...s?timespan=all

The meaningful relationship is the network value and hashrate not price.

That being said, the Bitcoin network reached an all-time hashrate yesterday 9/3/2019.
Attached Image (click to enlarge)
Click to Enlarge Name: Hash Rate.PNG Size: 64 KB
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