Altcoins...WHY THE LOWERED IN THE PAST MONTHS??

Altcoins 05/02/2018 in falling day by day..

The altcoins have shrunk as much as Kevin Spacey's fans - not only in value against Bitcoin, but also in terms of euros or dollars.

But then, what happened?

Problem # 1: Too many people were expecting a return of altcoins

Here is one of my favorite quotes from Bernard Baruch:

"The main purpose of the stock markets is to hurt as many people as possible."

If there's one thing I've learned, it's that once everyone "believes" that something is going to happen in the markets, it never happens. The market gods do not allow it.

For example: did you ever see a company publish good results, to see then collapse the course of its action?

This tendency for markets to price future events well in advance is called discounting. It is this phenomenon that is at the origin of the situation that is summarized by the adage "buy the rumor, sell the news".

As cryptocurrency markets become more mature, this phenomenon, which means that a significant amount of information is already well taken into account in current prices, becomes more efficient. Not so long ago, you could reach a sharp rise as soon as an update was announced by a developer, or an addition on a new trading platform.

This time seems about to be over.

Just remember this: the more you hear people predicting something, the less likely it is to happen.

We can not all win in a zero sum game.

Issue # 2: Market life cycles govern

Market life cycles are "patterns" found on all assets, and on all periodicities. Look at gold, the Dow Jones, Bitcoin in 2013, the US dollar, or even your pulse ... which governs

Market life cycles can be described as the impulse of a wave, followed by a slow decline.

The reasons behind this phenomenon are fascinating, and it could be the subject of many books.

But for now, here's what you need to know:

A new impulse usually does not occur until the "decline phase" is over, and volatility has decreased.

In the spring, altcoins were in a phase of decline

During this phase, "false" rebounds arouse the craze of investors, but never materialize in sharp rise:

Issue #3: Low liquidity fanned the flames

When compared to Bitcoin, most altcoins have very low liquidity.

What is liquidity?

An asset is said to be liquid if it is possible to buy it and sell it easily without having an impact on its price.

For example, imagine that you want to buy a Walmart stock. It is easy to buy, it is easy to sell, since one can find millions of shares available on the market. Buying one or two shares will have almost no impact on its price.

Now imagine that you want to sell your house. You are only 3 in the neighborhood wanting to sell yours. One of your neighbors decides to lower the price by 20%. You too will, no doubt, lower your price, only because of one seller. This is an illiquid market.

One way to measure the liquidity of an asset is to look at the number of buyers and sellers. And one of the methods to estimate this number is to look at the volume of exchange.

Here is a chart describing the average trading volume of the 600 main altcoins against Bitcoin (note that the left scale is logarithmic):

It can be seen that Bitcoin controls about 40% of the volume, and that the top 10 altcoins share about 90% of all exchanges.

 Références : Medium, Russell Investments