TRADING with CRYPTOCURRENCIES: VOLATILITY and PRICE : Class with ALBERTO G. TORIBIO
The Factory receives a visit from ALBERTO G. TORIBIO, a specialist in cryptocurrency, Blockchain technology and innovation. In the session, Alberto tells us the factors that affect the price of cryptocurrencies and the reasons why cryptos are so volatile.
My name is Alberto Gómez Toribio and I have been working in the field of cryptocurrencies for a few years.
Today, people are getting deeper into the world of trading, which can be done with a lot of things. Trading is the main market or economic activity around cryptocurrencies, so it is something ...
Read moreMy name is Alberto Gómez Toribio and I have been working in the field of cryptocurrencies for a few years.
Today, people are getting deeper into the world of trading, which can be done with a lot of things. Trading is the main market or economic activity around cryptocurrencies, so it is something that can be very convenient to know a little more.
Why are cryptocurrencies so volatile? For those who know the market, it is not a new question. The answer is that the depth of the market is not too high and they also have segmentation because they have different order books, in no more than 30 or 40 large exchanges throughout the world. So if we talk about a depth of market of about 500 billion, actually, we are talking about a few hundred million on each of those exchanges. Moving the needle, moving the order book, is actually quite easy, with a couple of million euros you can move the needle and you can "eat" these operations at the beginning to start moving the price.
Arbitration here is a real opportunity. There are platforms that do not close, they operate 24/7, with technological tools with phis that allow you to build your own applications and automate, in a way, the investment strategies you want to do. Therefore, arbitrage and trading is one of the most developing activities at this time.
There are many companies trying to develop aggregators, screens in which you can see or detect arbitrage opportunities, send money between countries (which comes out to return, because buying bitcoins versus euros and then selling them in exchange for dollars turns out that, it is not only cheaper than sending money through the normal channel, but you also get a return).
What factors affect the price in the realm of cryptocurrencies? Creating a mechanism or a control panel would have to control the following aspects: - traditional indicators - the moment - the train - The volatility - the volume in the different markets ...
There are specific aspects, which are related to the economy or the asset that we are dealing with, such as the aforementioned: if there is a halving close or not, if there is going to be a change in the protocol in this accounting book or if the people who have a copy of that book are willing to install the new application, because if they are not, it may not affect them as much. It is important to follow these aspects closely because they affect the price.
Finally, we have the datasets: the exchanges, the datasets that give us information about the transactions that are taking place on the network ... For example: suddenly there is a peak of transactions from an exchange that is putting coins into circulation or its clients are selling bitcoins and they're pulling those off the exchange - that's an indicator. Other indicators are the order books themselves ... and of course, social media.
It is important to take into account the influencers, but it must be taken into account that the majority of users are not and, for them, it is not important whether or not bitcoin respects the crypto-anarchist manifesto, whether or not it will replace the euro, etc. What they care about is whether you are going to hit a stop or if you are going to break your stop loss. Therefore, it is important to understand that influencers affect the price but you also have to look at other things, such as what we call whales.
Whales are those users who have a lot of bitcoins or a lot of cryptocurrencies of a specific type and whose movements really affect the market. The fact that these users are going to sell a large part of their bitcoins is an indicator, surely, more powerful than the fact that an influencer, for example, posts on Twitter that they have just closed their account in crack, because they have let them down and you will never use it. These are aspects to consider.
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