Fundamental Dissonance

As with many things in the crypto world, the methods we use to determine the value of cryptoassets is still under construction.

We did make an introductory video about this last month, take a look here. One of the thought leaders when it comes to building these fundamentals is a Venture Capitalist named Christopher Burniske.

Over the weekend, Chris put out a blog called "Bitcoin & Ethereum: Prices are Down More than the Fundamentals."

As the title suggests, the post takes a good look at some of the network factors including the supply side (hashrate) and the demand side (daily transactions, functionality, active wallets) for two of the most popular cryptos.

Overall, these factors tend to line up fairly well with the price but Chris points out a divergence that could suggest the market is now oversold. 

Here's one graph that jumped out at me. It shows that usage of the Ethereum network has remained incredibly consistent since the beginning of 2018, yet the price has done nothing but fall in that time.

This research is a strong affirmation of our previous assessment that the volatility we've seen over the last month is primarily a technical sell-off and there is no fundamental reason for it.

Traditional Markets

The Jobs numbers didn't come in so hot on Friday and the markets ended up falling to their lows. The sentiment was so negative by the end of the week that when the futures opened last night, they opened with a large gap down.

However, headlines this morning saying that stocks are down may not be entirely forthcoming. The down they're referring to is simply because of the gap down at the open. Since the open, they've been fairly mixed with some regions up, some down, and some flat.

So far this morning, the news cycle is rather gloomy but it really doesn't seem to matter. The markets are far from reacting to the fundamentals anyway. The weaker than expected jobs numbers on Friday should probably have been taken by the markets as a positive sign. Yet, here we are.

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Please note: All data, figures & graphs are valid as of December 10th. All trading carries risk. Only risk capital you can afford to lose.

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