Ever since 2009 the cryptocurrency market has developed into a whole new opportunity of wealth management, professional #trading respectively. In the following, you can find some of the major reasons why the crypto market cannot be approached and analyzed like the regular stock market:
Number 1: VALUATIONS
The method of business valuation for cryptocurrencies differ from standard company valuation methods.
Instead of asset-based valuation methods, so called "earning value approaches" are applicable. Latter base on the potential of future revenue generation, hence are difficult to evaluate and display a certain risk of deviations which might also explain the high market volatility. It is simply difficult to know a crypto's true value without tangible assets or revenue.
Number 2: HYPE.
Literally every mentionable corporation has established an own blockchain R&D department to not "miss the train". The market is fueled by attention and the so called FOMO, fear of missing out. The recent market consolidation (110b to 80b) nicely displays the consequences of having earning value approaches striving as valuation methods.
Fear occurs -> cryptos are being sold as investors are uncertain about their intrinsic value.
Number 3: TIME OF DEVELOPMENT
It all started in 2009, that is only 8 years ago. Blockchain technology is a first step of decentralizing economies, data etc. but in its early stages not mature. The concept has introduced a new industry which will develop and ripe into a standard that we will face in all kind of daily encounters just as the internet has developed from a military information transmission system to a global fundament striving through all kind of industries.
The cryptomarket is not yet but will, without doubt, develop into a major industry moving on the same levels as NASDAQ and other stock markets.