A recent study shows that the prices of Bitcoin, Ethereum, and other cryptocurrencies depend on the mood of investors rather than any economic indicators.

Daniele Bianchi, assistant professor of finance at Warwick Business School in the United Kingdom, found that the price changes of the 14 major cryptocurrencies reflected the past returns of investors and the emotional changes they experienced when they watched the value rise or fall.

Daniele Bianchi wrote in the paper titled “Empirical Analysis: Cryptocurrencies as an Asset Class”:

Studies have shown limited similarities between Bitcoin and gold. However, the high volatility of the prices of the 14 major cryptocurrencies means that they can hardly be regarded as a reliable saving method in the short term, let alone medium-term or long-term.

He also mentioned in the paper:

This can be attributed to the fact that Bitcoin and other cryptocurrencies have not been incorporated into the jurisdiction of the government or financial institutions. The cryptocurrency is not an ordinary currency, and investing in it is more like buying stocks from high-tech companies.

In the past six weeks, the price of Bitcoin fluctuated between $6,500 and $10,000. Daniele Bianchi therefore sent warm tips: The current cryptocurrency market is similar to the Internet bubble between 1997 and 2001, when overtime market speculation led to the closure of many Internet companies. Daniele Bianchi said:

Most cryptocurrencies are issued through unregulated ICOs, similar to initial public offerings (IPOs).

Therefore, the cryptocurrency market may look like the dot-com bubble in the late 1990s, and only a few cryptocurrencies may survive, so for investors it is like choosing who will be today’s Amazon.

image via pixabay

source: independent.co.uk