The Case for an Artificial Value in Cryptocurrencies
November 07 2018 - 12:36PM
ADVFN Crypto NewsWire
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Bitcoin Global News (BGN)
November 07, 2018 -- ADVFN Crypto NewsWire -- At some level, the
idea that not all of the expressed values of Cryptocurrencies are
true is valid. In other words, the prices per coin that you see are
not really the prices you should see. Related to this, a question
that a lot of Crypto insiders and outsiders have been asking,
especially during this bear market, is: what factors are
influencing the trend of artificial values in coins beyond mere
market volatility?
In another sense, we could ask:
what is propping up coins that do not really have any intrinsic
value or actual platforms? Today, Coindesk suggested the answer
could be that it is hard to establish short positions on
Cryptocurrencies.
Backing up their claim is research
from Dr. Wang Chun Wei, who published a study last month on the
option of reselling Cryptocurrencies and what influences that
option. In it, Dr. Wei appears to have concluded that since he
found a clear correlation between mispricing and what are commonly
called heterogeneous beliefs, he also found that this supported the
idea that most cryptocurrencies trade above their real values.
While his language is a bit convoluted for the average person to
understand, Coindesk’s article attempts to break down the research
further. Through doing so, the article reminds reads that Dr. Wei
is already known for concluding that Tether does not seem to truly
have an impact on Bitcoin’s price swings, contrary to other
research on the subject. Thus, it may seem confusing to some of you
how he can conclude on one hand that Cryptocurrencies commonly show
artificial value, while seeming to conclude on the other hand that
Tether does not really create artificial value. If you are one of
these people, then you are not off-base in thinking in this
way.
While we will not speculate on
Wei’s motivations in this fashion, based on the evidence at hand,
we can conclude that there might be little correlation between his
research. The reason behind this is simple. Wei and Coindesk point
out that his newest research was based on coins that most people
would consider to have “shady reputations.”
Perhaps, due to its market value,
Tether just does not fit that bill, as of yet.
By: BGN Editorial Staff
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