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The U.S. Dollar Influences the Price

The cryptocurrency market capitalization currently sits below $200 billion as measured by the US Dollar. Many long-term investors and market analysts have a variety of opinions as to why the market has shaved off nearly $800 billion from the all-time high.

Ben Walsh of Barron’s states, “No One Really Knows”.

Lionel Laurent of Bloomberg opines, “Bitcoin’s Crash Looks Like a Real Currency Crisis”.

Jay Adkisson of Forbes exclaims, “The Great Cryptocurrency Scam”.

There are not enough Tums tablets for even the staunchest investor to maintain composure under the torrent of negative opinions and analysis on the US Dollar rate of a cryptocurrency.

Any strongly tied currency pair will experience the gains and losses associated with each pair. The US Dollar marketplace presently suffers from a torrent of negative influences. This includes:

All of this leads to negative pressures on any investment tied to the US Dollar. As evidenced by the NASDAQ, it went from $8,100 on August 31 to $6,983 on Black Friday November 23. Also, Bitcoin went from $6,900 to $4,300 over the same time span.

Investors do not always make rational decisions. The technology behind cryptocurrency is unlike anything else today. Some short-term investors are seeking fiat-based gains on cryptocurrency investments given the previous substantial increases. These investors are measuring the success or failure of their investment using the fiat nomenclature as everything else in their life is likely measured by the same.

Cryptocurrency is automated money. Until the invention of this technology, it was not possible to adequately measure and execute actions based on an event without using complex computing systems. By some measures, large systems such as Oracle, SAP or Net Suite has achieved success working around the problems of money within the system. The money was never truly automated, so all the other portions of the systems are designed as workarounds to this fact. This leads to semi-automated actions wherein humans must perform tasks involving money or money actions so that the overall system works.

Cryptocurrencies with built-in intelligence, such as Ethereum and EOS and others, can track and execute actions automatically without the need for human intervention. This means that money can now become a variable in a larger mathematical equation. This frictionless environment is a paradigm change over the fiat-based systems.

Systems developers can now create entire automated process flows with a large degree of control over the variables in which the application operates. This removes the need for many classes of workers that systems like SAP, Oracle and Net Suite requires. This also gives rise to the opportunity for new classes of workers to create solutions without the incessant fear over unautomated money. Much in the same way that most people view dumb phones, the modern entrepreneur remains unconcerned over the fiat pair of cryptocurrencies.

Based on this, I view 2019 and beyond as years of growth opportunities for cryptocurrency driven solutions. I also view the next few years as problematic for any fiat-based currency.

 


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