Recent crypto market is taking a beating which is the reflection of state of mind by the whales whom own about 75% of cryptos as being only 1% of the holders. Clearly, the crypto market is not based on the traditional supply-demand model.
It is the will of the whales which determines the crypto market direction.
Then, what made the recent big drop in crypto prices, considering the whales are already millionaires if not billionaires.
Looking back around Nov. 8th, 2018 when the mid term election results show many of Trump's many expansion programs will be likely put on hold along with hard line policy against China will continue. This could have made the whales uncomfortable about the future of cryptos, including the Chinese who owns about 40% of the cryptos globally. For others including Americans, strong dollar position is forecasted which is detrimental to cryptos.
As shown on the graph "1", the first drop of NASDAQ index(Orange) lead the drop pulling down the ETH(BLUE) while BTC (RED) was relatively holding its position which continues until around Nov. 12th, 2018.
Usually, in order to realize the profit, people sell the assets that have made them profits without intrinsic value such as cryptos first. Therefore, it is natural for the whales to take safe stance by selling the cryptos and hold stocks.
With this in mind, on Nov. 11th 2018 Goldman came out with grim economic forecast that profit margin will be down to 4% along with high inflation due the end of economic cycle which could have impacted the whales sentiments about the selling the cryptos.
This is shown the decoupling of crypto prices drop and NASDAQ index as shown on "2" and "3"
Now comes the big question.
What is the future of crypto market?
From the graph, it seems the crypto market is dead as of now. But knowing the behavior of rich people around me, the rich people usually focus on the assets which made them millionaires first. i.e. those who made millions in real estate always invest in real estate, and stocks for stocks etc. Therefore, I believe the whales will come back to crypto market sooner or later.
The questions is; Will they come back to the 1st generation cryptos such as BTC or ETH with many technical and business model deficiencies? or the next generation coins that has overcome the problems of the 1st generation coins.
One thing the comeback of the whales to crypto market sooner will be the weak dollar caused by many other factors which incidentally the crypto industry is born by 2008 housing meltdown crisis that caused distrust in dollar.