A recent study has shed some light on the way fundamentals can affect the cryptocurrency market. The analysis carried out by the Swiss Bank of International Settlements (BIS) suggests that news about the establishment of new legal frameworks has the most positive effect on prices.
The study looks at the price movements of Bitcoin and other cryptos within a ten-day range, after major news stories and announcements about new crypto-based regulations.
What it reveals, according to the BIS, is that cryptos can be thought of as actually less decentralized than they claim. This is due to how fundamentally their value depends on news about national government regulations.
Cryptocurrency prices react negatively to news they will be banned, regulated as securities or not considered currencies, but positively to news of legal frameworks tailored to #Cryptocurrencies & #InitialCoinOfferings #ICO https://t.co/cSSBYTasja pic.twitter.com/6cPUx8Aeim— Bank for Intl Settl. (@BIS_org) September 24, 2018
The study shows that announcements of new legal frameworks coincides with the strongest gains in value in the crypto market. Announcements about cryptocurrencies being regulated as securities tend to negatively affect the prices the most, followed by news about governments combating money laundering and terrorism funding, as well as moves that will restrict the interoperability of cryptos.