According to Binance, the "waning" period of cryptocurrencies may be over. Certainly a positive dossier for the future of the industry.
Binance Research has just published a dossier in which it takes stock of the changes that exist in the correlations between cryptocurrencies and the main market structures, stating that the cryptocurrency market may have reached the bottom, and that therefore its declining phase / bearish could be terminated.
Key study results
In the analysis Binance Researchh outlined some elements of the cryptocurrency market that they make difficult to make a uniform comparison with traditional markets.
For example, only 7% of all cryptocurrency assets are held by institutional investors, with a very small fraction compared to institutional holdings in the US stock market. Comparatively, the cryptocurrency market has only 1/13 of the proportional amount of institutional investors present in other markets.
Moreover, the cryptocurrency market has extremely high turnover rates. This means that investors in the sector are much more sensitive to changes in the market, inclined to be either too confident or too pessimistic. This feature leads to higher transaction volumes and greater volatility. In comparison, the cryptocurrency market turnover rate is six times higher than the US stock market and three times higher than the Chinese stock market.
Third and last, the report points out that the reason cryptocurrency markets tend to drop in transaction volume during the downturn is that investors tend to keep assets when prices drop, in a stark difference from others. markets with institutional investors.
Bearish market in the final phase
Based on the internal correlations identified in the Binance Research report, the study concludes that the declining cryptocurrency market has run out.
There are some indications in this regard. For example, the highest volume ever recorded on Bitcoin Futures trading CME occurred in March, and price activity also flattened for some time during 2019, with March being one of the more stable months for Bitcoin in terms of price volatility.
Although the dossier mentions some limitations to the cryptocurrency industry, such as incomplete regulations, asymmetric information and limited arbitrage channels, the report still states that 2018 was a year of necessary "adjustments". In summary, however, the worst times are behind us.
And what do you think?
