It's time for a change. We've been watching the crypto markets go down, up a bit, a little bit more down, again a bit up, and so on. Are you tired of this? Me too. Let's see what everyone of us can do to finally push this whole thing into the right direction. But first, let's have a look what the biggest drivers are for crypto.

Regulatory news

This is actually something I don't understand. Whenever there are news about regulation of crypto, the market goes down a lot. Why is that? Is anybody fearing that people will stop using crypto because it's regulated one way or the other? I think that's entirely wrong. A proper regulation would bring a lot of certainty and therefore the really big players could start investing. This would finally push the prices to new highs, because their buying power is so much bigger than anything we've seen so far in crypto.

Bitcoin price

Bitcoin is still kind of the reserve currency for most of crypto. The price correlation of most cryptos with Bitcoin is extremely high, with an even increased volatility. Let's have a quick look at these dynamics:

Everybody wants to sell their crypto. This means they first sell, e.g. IOTA vs. BTC, which means that the IOTA supply against BTC increases and therefore the price goes down against BTC. Then, they sell their BTC against USD(T), which means the BTC price goes down against USD(T). The additional demand for BTC in the IOTA/BTC transaction doesn't necessarily lead to higher prices of BTC, as many of the IOTA sell orders are executed against the existing market.

In any case, the Bitcoin price is a strong driver for the overall crypto market caps. There are suprisingly few cryptos that have withstood the recent price drops in BTC.

Ether price

Due to the increasing popularity of decentralized exchanges, most of which operate on Ethereum and trade against ETH, as well as some pairs offered by centralized exchanges, the ETH price has a similar effect on many coins, especially those created during ICOs.

Institutional price drivers

There is an increasing number of institutional investors in the crypto space. They are the first and most important traders of Bitcoin futures and have a very particular interest in moving the price in one way or another. If you have a large short position in futures, you'd want to push the price down to cash out. If the open interest in futures is much bigger than the number of Bitcoins actually traded, it may be very easy to manipulate the market to generate money in case the people on the "long" side of the futures don't fight back. They may not want to increase their risk by opening up even bigger positions by buying more Bitcoin on the market (or not able due to policy restrictions).

Wrap-up

So if these are the strongest drivers of crypto price, we should be able to influence some of them, right? I'll present some possibilities in the next article.

In the meantime, I'm happy to discuss whether there are any other influences and drivers that you think cause the price to go one direction or another.