crypto speculation and knee jerking

Hi,

Today I'm talking about knee jerking in the crypto currency space.

Look at the blue spark lines to the right of each of these cryptocurrencies (I took the screenshot on 2 days ago), and you will notice that it was not just Bitcoin that suffered on the news of the failed hard fork (on around the 8th November), but all of these and many more too:

Uncanny how the shape of those lines are all the same! (By the way, the prices in the screenshot are in South African Rands if you were wondering)
There was a clear spike in the prices for basically all of the cryptocurrencies leading up to the bad news(look for the spike/peak in each line), and then a subsequent tumble for all of them.

But the hard fork was a Bitcoin thing right?

Yes it was, what this tells you is that there is possibly a sentiment flying around that if one cryptocurrency falls, they all do.
It also tells you that there is a lot of speculating going on, which means most of these cryptocurrencies are over valued.

For some this is pure gambling (I'm a data scientist in the gambling industry lol). Obviously, the chaps who made truckloads of money off the initial Bitcoin pricing way back when, left some of us with lasting impressions! I mean this is like playing the lottery! Hedge your bets across a few cryptocurrencies and one has got to succeed right!?

Well, with thousands of cryptos today, I guess this is like a playing the lottery in some respects. So is trading on the stock market in a way!

And I'm not ashamed to admit that I am one of those players. However, I try to make informed guesses and estimates, or guesstimates!

Let's see if we can fine tune our "guesstimates". Over and above my crypto speculating post, (https://steemit.com/crypto/@trevornell/crypto-speculating-justified) which gives good reason for speculating on a few items, there are other tools with which to ascertain genuine interest/value in a crypto.

Like Google trends:

Here you can see what sort of interest the various cryptocurrencies are enjoying. In particular, you can see that Ethereal and Ripple are enjoying the lions share of the interest out of the selection of 5 cryptocurrencies. Interestingly, Ethereal enjoyed massive interest up front which has died down, while Ripple has been gaining in momentum, slowly but surely.

Google Trends will also show which regions are responsible for generating the interest:

Hovering over the various countries will give a quantitative measure of the relative interest in the item. In both of the cryptocurrencies above, Australia is responsible for generating much of the interest.

Using this news as inspiration, you might stumble upon the recent news article on the rolling out of 2,900 Bitcoin ATM's in Australia! (https://www.itnews.com.au/news/three-thousand-bitcoin-atms-to-launch-across-australia-472448)

The reason for the ATM's is that the Aussies love digital currencies, and the ATM's solve having to wait days for an exchange to payout in Aussie Dollars(AUD). You can convert Bitcoin to hard AUD right there and then at the ATM! That increases the liquidity of Bitcoin in Australia too.

Now this is great news from an adoption point of view. The more a cryptocurrency gets adopted by vendors and people on the ground, the more liquid and 'real' it becomes, which in turn ultimately translates into more transactions, and, therefore, value. (see the relationship between size of network and value here:
http://www.businessinsider.com/bitcoin-price-movement-explained-by-one-equation-fundstrat-tom-lee-metcalf-law-network-effect-2017-10)

Ripple coin, on the other hand, is seeking to tap into the already massive number of transactions banks do every day. But that you would have seen in my previous post mentioned earlier!

What I am getting at, is that with just a little effort, you can make reasonable inroads into discerning between random speculation and real inroads being made by a cryptocurrency.

I will end off by saying that not all of Bitcoin is speculation and knee jerking on bad news, this is obvious from the following graph of the price today, one week after the hard fork bad news:

The price dropped 20% odd from R105 000 to 85 000 before it rebounded back to where it was, showing that there was a limit to the knee jerking. Perhaps a great chunk of the rest of the 80% have indeed done their homework!

Good luck!

Disclaimer: This post should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.