Steemit Crypto Academy Contest / S11W04 - Cryptographic News And Events

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Greetings friends

Under this week's topic, we will be examining if news, new developments impacts the price of a cryptocurrency market and if the market can be manipulated in favor of certain class. Hopefully we will learn this and many more. Without further ado, let's swing into the heat of things.

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Can news affect the prices of Cryptocurrencies?

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Cryptocurrencies are digital currencies that are not issued by a central bank or backed by a government; therefore, you had wondered if certain monetary policies affect their price. However, since they are being used as entities to store value, certain factors influence their price, factors such as;

• Supply and Demand
• The Cost of production
• Laws governing its sale and use
• Media and news etc.

Therefore, News and the media inevitably affect the price of cryptocurrencies like every other financial market. As financial markets are impacted by news related to economic policies, currency deviation, changes in government, inflation rate, supply and demand, etc.

Likewise, a highly volatile crypto market is affected by news relating to its parameters, such as supply and demand, market cap, regulations, market sentiment, etc.

For instance, if the News reports a positive event about a cryptocurrency, this could encourage more people to invest in the said cryptocurrency, hence, increasing the market value of that cryptocurrency and the opposite for bad news.

Practically, news about a cryptocurrency has a way of playing with the market sentiment. Hence, certain news is makes up part of Fundamental Analysis. Examples are News related to the rate of adoption, the road map, market cap, and about the cryptocurrency project.

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Which has a greater impact on the price of a crypto asset: technical or fundamental analysis?

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First, let's look at what technical and fundamental analysis are and what differentiates these two analysis methods. With their goals and differences then, we will be able to judge which one among them causes more impact on the price of a crypto asset.

What are Technical and Fundamental Analyses and how are they utilized?

Technical (specialized) analysis is a type of analysis that pays reference to trends and patterns corresponding to documented (historical) price movements in crypto. That is to say, it is an analysis method that utilizes past recorded price movements and patterns like chart patterns, support and resistance levels, trend lines, and indicators such as moving averages, traded volume, and Relative Strength Index (RSI), in other to predict future price movements or patterns of the cryptocurrency. Whereas,

Fundamental (essential) analysis, is an analytical method used to determine the intrinsic value of a cryptocurrency, I.e. it is an objective measure of the worth of a cryptocurrency. This type of analysis considers various key factors of the cryptocurrency, such as;

Blockchain Technology and Uses:
This involves reviewing the blockchain technology, the scalability of the said crypto, its security, and the issues the cryptocurrency aims to solve in life.

The Team and Development:
This includes evaluating the knowledge and expertise of the development crew and their progress in attaining the said project's goals.

Community and Adoption:
This involves the evaluation of the scope and engagement of the community backing the cryptocurrency and its acceptance in the real world.

The Market and Industry Trends:
Involves the understanding of the bigger picture of the market trends and how the particular cryptocurrency fits into the ever-evolving crypto landscape.

The Tokenomics and Supply of the Crypto:
This evaluates the cryptocurrency utility, its distribution channel, and inflation/deflation mechanisms impacting the supply of the cryptocurrency.

Therefore, we can say that both types of analyses are important and has an impact on cryptocurrency prices. However, I believe that fundamental analysis which has to do with the basis to which the crypto even exist has more impact on a crypto's price in the long run, whereas Technical analysis can be utilized in trades of short intervals, as its impact can be considered minimal and short.

Therefore, solid and prominent fundamentals build trust among investors and traders alike. However, if the fundamentals (I.e. the necessities) of a cryptocurrency are vulnerable and fragile and thrive solely on publicity and promotion without the expertise and genuine ideology, it is destined to crash in the long run.

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Do events such as massive coin sales, coin burning, and the creation of new tools for a blockchain affect the price of cryptocurrencies? If so, can you provide examples and explain how?

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All these events impact the price of a cryptocurrency, why so? This is because they all affect the factors I've mentioned earlier that affect the price of any cryptocurrency such as market sentiment, and supply and demand. Let's see how that happens;

Massive Coin Sales

The massive selling of coins increases the market supply, meaning there is a huge quantity in the market space and if this supply is not met by demand, the price of that crypto tends to drop because there is excess supply. This is because the price of any commodity is determined by the Interaction of supply and demand.

This can also be the opposite, that is when an established firm or organization buys a massive chunk of a coin, it tends to build more between seasonal traders which in turn can cause a price increase.

For example, we look at Ripple, when a substantial amount of its coin XRP was sold to institutional investors, which increased supply, leading to a decrease in prices as there were no matching demands.

Coin Burning

This involves coins being permanently expelled from the circulating supply of a cryptocurrency by sending these coins to an address where they can never be retrieved or put back into circulation. In order words, it involves decreasing the supply, thereby increasing demand. Having in mind that the decrease in supply and increase in demand will lead to an increase in price.

A practical example in real life is when central banks adjust the portion of money in circulation to alter the purchasing ability. The idea is that if it is rare, it will be appreciated more.

Some examples of Cryptocurrencies to have undergone coin burning include Luna, Bitcoin Cash, Stellar, and Shiba Inu

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In November 2021, Luna announced that the coin will be undergoing coin burning following a vote by the community. When it finally underwent the burning, it is said to have recorded the biggest coin burn. As 88.7 million LUNA worth roughly $4.5 billion were burned which in turn helped Luna achieve a new record high in value moving from $50 to $54.95. _source

Here on Steemit, we take the same actions by setting 25% beneficiary to a null account in the #burnsteem25 initiative by burning 25% of our rewards.

New Blockchain Tools

New Blockchain tools such as dApps, protocols, or features are set up on a blockchain, it tends to enhance its functionality and accessibility, which in turn can lead to an increase in demand. For example, the splitting of Bitcoin into Bitcoin and Bitcoin Cash brought about an increase in the price of Bitcoin. Another example would be, the feature of DeFi by Ethereum which revolutionize the cryptocurrency world.

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Investigate the news that affected the cryptocurrency market.

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There are multiple evidence of news that have affected the prices of cryptocurrencies positively and negatively. Below is a table and demographics showing examples of news and how it affected the price of Bitcoin in the market.

Date	News	∆ Price after 10 days	Source
March 10, 2017,	USA SEC rejected Winkelwos’ crypto-currency ETF application	Negative	link
April 1, 2017,	Japan affirms Bitcoin as a legal tender	Positive	link
August 1, 2017,	Bitcoin divides into Bitcoin Cash and Bitcoin	Positive	link
September 3, 2017,	China forbids ICO for crypto-currencies	Negative	link