- What drives crypto prices?
- Today's cryptocurrency prices
- Two negative news items appear to be weighing on the cryptocurrency markets.
- Why Cryptocurrencies Keep Crashing
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- Why Are All Cryptocurrencies Falling - 5 Reasons Behind Crypto Market Crash - November 27, 2018
Reasons TRON might be the root source of crypto-troubles today:
First, some background: A post hours ago by steemit-maven @kingscrown explained today's selloff as based on some indices removing Korean cryptocurrency pricing from their average-pricing algos. This SEEMS to make sense, and indeed might be a contributor to today's melee; BUT, it's always VERY hard to determine exactly WHAT is causing an overall market to make lots of volatility.
What drives crypto prices?
Obviously if cryptocurrencies are going to have ridiculous up days, for which no one complains, then it should ALSO be expected cryptocurrencies will have ridiculous down days as well.
But the main worry is always? Is this the crash which will destroy > 90% of all cryptoassets on the earth? Tough to say, but it's best to provide more than one explanation for a volatile day, and we've used some long experience in stock markets to provide some more info which will perhaps inform your future actions...
#1 TRON's decline began before bitcoin's decline
TRON topped out on January 5th after an insane 4 week run from obscurity to one of crypto's biggest market caps.
TRON lost $18 billion in USD value before bitcoin even finished topping out for the week (yesterday).
What caused the decline in the first place? The TRON whitepaper of all things-- some sources on Twitter "outed" the whitepaper as a "cut & paste" copy of other previous work, and then Charles Lee chimed-in with a retweet of that "outing" and TRON's demise began.
Today's cryptocurrency prices
We're not saying TRON is a fraud or anything; after all, Charles Lee himself copied almost ALL of bitcoin so he's really not one to talk (and he should remember that). However, a sniff of underhandedness is something cryptocurrencies which just rose 1,000% don't take kindly. In our view, the rise and drop in TRON is more indicative of a trend in cryptoworld for 2018, than the drop is an indictment of TRON.
What do we mean by that?
#2 TRON represents the new leader-class in crypto:
TRON's run has been based on the simple one-liner: "it's the iTunes of the decentralized crypto-net" (paraphrased).
If you know anything about the history of Napster and iTunes, you'll see that's a KIND comparison. What Amazon is doing for self-publishing books, TRON aims to do for ALL media, right? Simple story, people love it, and TRON is SUCH a new concept it was easily ripped into the heavens along with some other fellow "story-stock" app-coins (app-tokens?).
The point is, everyone from the shoe-shine kid to CEOs of multi-national companies to world leaders is now aware of cryptoCURRENCY, but they need something to rip and scream "there's more!".
Two negative news items appear to be weighing on the cryptocurrency markets.
TRON makes sense to people, and therefore represents the NEXT understanding in crypto; namely, it can be used for more than just currency. While this was readily proven already by the darknet's PirateBay and Silk Road years ago, the popularity of "smart-contracts" is slightly broadening that reach beyond just MONEY or CURRENCY. In short, how can a decentralized exchange allow, say, MUSICIANS to get paid for their content creation without having to pay several middlemen to get their content to the masses?
Why Cryptocurrencies Keep Crashing
TRON represents ONE of the many use cases crypto-assets can serve in what we'd call the "dark" apps. We say "dark" bc while it COULD be disruptive, it's most LIKELY disruptive via somewhat DUBIOUS means in the early days.
We could go on, but in short, TRON represents a new kind of crypto-asset, and it's rise and fall will tend to be the 2018 "app-coin" tail that wags the proverbial "cryptoworld" dog, and not the other way around.
#3 TRON's decline is outsized vs its longevity.
While TRON is new on the crypto-scene (AUGUST 27 2017!), it's loss since Jan 5, 2017 has been OUTSIZED.
Namely, it's lost $18 billion in value, down 47% from just 3 days ago!
Compare this to the almost 10x bigger and zillion times older bitcoin, and that's a MASSIVE dent in the crypto-market armor. Bitcoin, while only down about 14% from it's high from just a day ago, is down about $39 billion.
#4 Bitcoin's undergone much worse
There's already been many "tough-news days" bitcoin has undergone, so there's really nothing out there which would spook cryptomaniacs today as relates to the major coins.
But in TRON, there's been some discover since it's massive multi-week rise. Perhaps the #1 discovery is just how NEW and "on the come" this currency is. Try to think of it this way, TRON reached approximately $40 BILLION valuation in less than a half year. Even with Snap's near overnite-success it took several YEARS as well as A WORKING APP and even some revenues to reach that level-- a level it's not even touting right now!
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In short, TRON is/was WAY WAY ahead of itself, and the market just told you that in the past 4 days. So while Bitcoin and the other major cryptos have endured much much worse than anything else that's happened in the past 48 hours, TRON has NOT.
Therefore, the massive almost $20 BILLION drop in TRON is scaring the market.
Why? Because markets are ultimately smart, and cooler heads usually prevail. There MIGHT be a story which makes TRON at $40 billion valuation seem reasonable, but with zero history and nary a product the market has correctly said "it's too high" (for now, and maybe forever?)
#5 Justin Sun's picture?
Have you seen the guy behind TRON? Look, we remember Bill Gates' picture when he was just starting out in New Mexico, so this isn't a VERDICT of the kid.
But just like Bill Gates was ridiculed, it's pretty easy to lose confidence in cryptoworld in general when you see a picture of one of it's newest "leaders" and it's this....
You can see how some doubts may emerge that the whole cryptoworld has gone nuts, and induce some selling, no?
#6 Is TRON a serious entity?
The crypto investment markets read this as "Is crypto a real entity"?
Did a young-looking pimpled Bill Gates make comments like this which aren't focused on product but on "mentions"?
click/read this... (it's just one sentence)
Question? On what are today's crypto-leaders focusing?
Business, or bullocks?
TRON not only represents an ICON (much like mint jelly is the icon for serving lamb for dinner) foretelling a shift in punter focus in the cryptocurrency world from 2017's "year of the alt-currency" to 2018's "year of the app-coins", but it's also become app-coins posterchild at the moment, and we expect this to last on the order of at LEAST weeks if not a few months until it's relieved of the duty by the next hot sector in crypto.
Expect PLENTY of copycat tokens in the coming weeks/months.
We, as always, wish cryptoworld the best, but simply wish to state that days like today will become more common, not less, as certain absurd things happen like an app-coin rising in mere months from obscurity to "FANG"-like popularity, which warrants inspection by "cooler heads" who know how to value things-- including the very founders of the appcoin's themselves.
Why Are All Cryptocurrencies Falling - 5 Reasons Behind Crypto Market Crash - November 27, 2018
After all, who's more likely to have initiated a selloff, a bunch of punters trading $1,000 at a time in TRON, or those who owned LOTS of Tron since the early days? We point to Charles Lee selling his Litecoin at almost the very top. While we respect his decision, and think he's probably doing it for the right reasons, it still represented the top in what we'd call "alt-coins" (by altcoins we mean cryptos like Ether and Litecoin who's gains outstripped bitcoin's in 2017)-- to this day.
Is TRON's drop in the past 100 hours the straw that breaks the camel's back?
That's a much much bigger question, and we leave it to you readers in the comments....
Good Luck Steemians!