Adoption

Regulation

Technical Indicators

Public Sentiment

Disclaimer: Content Produced by Alluva

The cryptocurrency asset class is just over ten years old, which means that investors are still finding new ways to chart, predict, and forecast future prices and valuations in the market. Even though the digital currency market has been relatively stagnant in contrast to the bull run in 2017, institutional investors are determined to make money off of the market, either in the short term or by holding long positions.Over the past few weeks, global markets have witnessed unprecedented levels of volatility and downward selling pressure. In light of this event, we believe it is worth taking a closer look at how emerging asset classes such as cryptocurrency are affected by a global economic and social crisis. To that end, let’s take a look at some of the biggest factors that institutional investors consider and track every day as part of their due diligence processes.Similar to traditional fiat currencies, cryptocurrencies such as Bitcoin are at their most powerful when everyone accepts them, either as a means of payment or a store of value. While some digital currencies like Bitcoin and Nano aim to disrupt the current notion of money, others like Ethereum stand to revolutionize entire industries by improving efficiency and automation. While the former would benefit from increased usage in the retail space, the latter category can skip consumers and still end up incredibly successful. Regardless of this difference though, any increase in adoption generally translates into a net increase in valuation for the token or digital asset.Overbearing governmental regulation can heavily inhibit the growth of cryptocurrencies, especially if the regions are integral to the crypto market’s development and success. China, for one, banned several parts of the crypto ecosystem in 2017, including integral parts of it such as trading, usage, and fundraising through Initial Coin Offerings. This invariably led to widespread panic selling and uncertainty over the future of the market. While Chinese exchanges once accounted for a whopping 90% of trading volume, that figure has since dropped to under 1%.In 2018, the Reserve Bank of India attempted to achieve a similar ban [which was lifted earlier this month] and froze banking channels for all crypto businesses in the country. However, global markets barely responded to this move, largely owing to the fact that the rupee was involved in a small percentage of global crypto transactions.As with any other market, institutional investors rely heavily on charts and technical indicators to gauge where prices are headed and understand past trends. Some examples of these indicators include moving averages , uptrends , and price resistances . While many indicators require a firm understanding of mathematics and statistics, the vast majority of them can be visually represented on a graph as well. This makes certain technical indicators accessible to a larger number of investors.Whether or not the cryptocurrency market performs well on any given day depends heavily on how the industry is perceived by the general public around that time. An increase in adoption and new businesses accepting the asset as a payment method naturally translates to increased usability and makes the cryptocurrency far more valuable. Conversely, news related to lackluster development or security breaches can cause many investors to quickly dump their positions. As a result, paying attention to crypto-related news is often considered to be one of the most crucial first steps to predict future crypto prices.While technical indicators and news are accessible enough for every investor, factors such as public sentiment are much harder to assess. Thankfully, platforms like Alluva are trying to revolutionize the crypto market by making this kind of information far more accessible. Alluva is a predictive data intelligence tool that gathers predictions from thousands of individual analysts around the world. These insights are then analyzed through Alluva’s proprietary algorithms to paint an accurate picture of the market sentiment. Institutional investors around the globe then use this data to make more informed decisions and better understand the market.While cryptocurrency insights have historically been hard to come by, that trend has clearly started to change lately. With the emergence of these new methods and tools, it will likely only be a matter of time before investors have greater faith in the crypto market.