Ethereum
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ETH · 3w

How do you understand and analyze the behavior of crypto assets?

At the dawn of the crypto market, when specialists were trying to create a framework for cryptocurrencies and categorizing them as an asset class. As part of the categorization, specialists in economics had to understand and analyze the behavior of crypto assets as a type of market class and approximate it to existing assets and their established fundamental analysis theories.

Analyzing Cryptocurrencies – The Class

Analyzing cryptocurrencies is just as an art as it is process of mathematical sifting, since they are unlike any other asset or commodity that has ever been developed or market fielded. A shining example successful categorization of cryptocurrencies as an asset is the case of Bitcoin itself, which has long been considered an asset class in its own right. The king of cryptocurrencies has been outperforming every other asset in history by its price dynamics. And yet, it has shown to demonstrate behavior similar to the behavior of traditional financial assets, such as currencies on Forex exchanges. However, historical data and in-depth analysis of formulated historical price charts of Bitcoin has proven that the cryptocurrency is more of a commodity than a currency when it comes to its behavior analysis.

Being by virtue highly susceptible to external triggers, like announcements of adoption by major companies, or large inflows of investment from major funds, Bitcoin can be correlated to oil, which is just as susceptible to geopolitical events and reacts violently in price. Bitcoin’s price hikes outstrip those of oil greatly, but the digital currency is as much perceptive of the real, base economic principles that set it aside as a commodity – in essence – an abiding element of classical economics.

Bitcoin is a carrier of intrinsic value, as most coins and stablecoins on the market, and that means that it beats intrinsic value and abides by the laws of supply and demand, since it, as an asset with limited emission, is also...

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