Analyst Mati Greenspan argues that the recent cryptocurrency market decline was a response to a strengthening US dollar, not an ICO-fueled sell-off.
The cryptocurrency markets experienced a slight pullback on Thursday but have more or less managed to maintain the midweek recovery that followed Monday’s massive sell-off.
As CCN reported, some analysts attributed that decline — which affected ethereum to a far greater extent than bitcoin — to ICO-funded startups cashing out their capital before the market takes an even further dip. Arthur Hayes, CEO of cryptocurrency derivatives exchange BitMEX, added that he believes nervous VCs will soon begin moving out of their ICO tokens and ether holdings, which he forecasts will ultimately drive the ethereum price below $100.
However, Mati Greenspan, senior market analyst at eToro, believes that this assessment misses the mark. Writing in market commentary made available to CCN, Greenspan argued that the crypto market’s movements this week have correlated with fluctuations among local currency values in emerging markets, which have been responding inversely to the strengthening of the US dollar.
This USD breakout caused the value of emerging markets currencies to plunge, and Greenspan says that there are signs — including spikes in blockchain activity — that suggest this pullback spilled over into cryptocurrencies. It’s true that investors in these markets often increase their cryptocurrency holdings when their local currencies weaken, but — for all its alleged faults — the dollar is still the reserve currency of choice for most investors worldwide.