Coinspeak Technical and Fundamental Market Analysis
BitMEX is out with an article on Bitcoin as a Reserve Currency for Cryptocurrency traders.
The holy grail for many users is a cryptocurrency that has a growing market cap, and falling price volatility. A large market cap helps improve liquidity and reduce transactions costs. Falling volatility means that Bitcoin can retain its value for longer periods of time. That helps facilitate its adoption in online commerce and as an asset used as a savings vehicle.
Bitcoin’s march towards reserve status is not welcomed by all. Many speculators, who account for a significant portion of trading volumes, prefer very volatile cryptocurrencies. Short-term trades with high leverage can yield stupendous returns. As Bitcoin’s volatility falls, it becomes boring and speculators search for the next hot altcoin.
The Cryptocurrency market is becoming a three horse race with: Bitcoin, Ethereum and Monero. Traders trade in and out of Ethereum and Monero using Bitcoin. Bitcoin has become the reserve currency in this market.
Bitcoin illustrates that for any coin to be successful, speculators must be attracted first by high volatility. The coin may be illiquid, but that is exactly what produces the wild price swings that keeps traders captivated. Volatility is the best form of advertising. A coin that is not volatile has either died, or is on the path towards reserve status like Bitcoin.
Calling Bitcoin stable is a bit of a stretch, but in comparison to other Cryptocurrency markets Bitcoin is the sanest choice in an insane world. As volatility decreases Bitcoin’s attractiveness as a store of value increases. This could be a feedback loop to drive price up over time.
All Eyez on Bitcoin:
https://www.youtube.com/watch?v=05PCmqjIeNE
