Strong US Dollar, Lack of Adoption Possible Reasons the Recent Crypto Crash Happened

Strong US Dollar, Lack of Adoption Possible Reasons the Recent Crypto Crash Happened
фото показано с : blokt.com

2018-8-19 20:09

The recent cryptocurrency market decline has left many from the crypto community shocked, arriving seemingly without warning. Now experts are trying to solve the puzzle of why it happened, but not everyone agrees on just what might have caused it.

VC Chris Burniske Says It’s Lack of Adoption

One possible reason for the recent market decline is the lack of adoption, according to venture capitalist Chris Burniske. Cryptocurrencies are designed to be used as a means of exchange, aside from being used for investing and trading. As more people use a particular token, it will naturally become more stable and resilient so that minor news events won’t be able to affect its price as much.

Unfortunately, crypto usage as a mode of payment remains low at present. It is hardly surprising, however, since there have been noted problems such as long transaction time, hefty transaction fees and the volatility of crypto prices. In addition, even the US Drug Enforcement Administration has suggested that majority of crypto transactions are speculative in nature.

In a lengthy Twitter post, Chris Burniske explained:

“1/ Why is #crypto falling so much in 2018? Because in 2017 the market was up > 30x, but adoption (beyond investing & trading) wasn’t concurrently up 30x.”

2/ One can try to explain each fluctuation, but these explanations are frequently stories we tell ourselves, stretching to add reason to traders driving a bear market.

3/ The macro story I tell myself is ‘financial reality’ divorced from utility fundamentals in 2017, and so we have to (expectedly) course correct.”

Dogecoin creator Jackson Palmer made a similar conclusion. According to Palmer, it’s the low usage of crypto networks that makes them fragile and susceptible to wildly fluctuating prices.

Mati Greenspan Says It’s Strong US Dollar

Meanwhile, eToro Senior Market Analyst Mati Greenspan has a different theory as to why the market decline happened. According to Greenspan, it was caused by a stronger US dollar and not the sell-off of ICO tokens.

In a Twitter post, Greenspan explained:

“Analysts trying to pin ETH’s decline on the ICO marker clearly have not done their homework. Money is flowing into Ethereum projects faster than ever. The decline was more correlated with the Dollar strength.”

In other words, the massive decline of the crypto market was just a spillover effect on the strengthening dollar. While the exact mechanism is still little understood, Greenspan says that a stronger dollar seems to have a noticeable impact on the crypto market.

Strong US Dollar, Lack of Adoption Possible Reasons the Recent Crypto Crash Happened was originally found on [blokt] - Blockchain, Bitcoin & Cryptocurrency News.

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