Listen to the people or do the math? How to measure sentiment on the crypto market.
We easily get used to good things. Some of us perhaps would not even remember what the world was like without cell phones, laptops, credit cards, uber, airbnb or blablacar. Interestingly, those of us who happen to take long rides with car sharing quite often have probably noticed how the “blabla” topics have changed over time, reflecting the broader developments in society. From ever-present topics such as favorite food and things to do in the destination city, to artificial intelligence and cryptocurrency.
These trips are a good way to gauge the general sentiment towards a specific phenomenon, like cryptocurrency and blockchain in particular. A couple of years ago, it was most commonly heard that crypto was something illegal and useless. Today, on the other hand, it is far more common to hear something like “I don’t really use cryptocurrency, but I love the idea of smart contracts — it’s definitely the future!”. Or “I have some Bitcoin, but it makes no sense at all to put payment in Bitcoin as part of a contract: if the payment coins were more stable, there would be some hope for the industry”.
Curiously, the sentiment of the general public often doesn’t coincide with the beliefs of the insiders or early adopters. For example, if the recent price movements of the crypto market seem to have perfectly reflected the news about Facebook’s Libra and politics around it, the crypto community firmly maintains that Libra is not cryptocurrency and hence speculations around it are irrelevant for the Bitcoin price (have a look at our Twitter poll for example).
At the same time, even if technically Libra is not a cryptocurrency due to the lack of the decentralization principle, it is powered by blockchain and it is protected by cryptography. This is arguably the reason for its perception by the mainstream public as a crypto coin and it’s therefore useless to deny that a whale like Facebook and Co. (the whitepaper implies the participation of dozens of big players of the financial services market) can realize the dream of most crypto enthusiasts — mass adoption.
If we look at some more sophisticated tools of crypto sentiment measurement, like the LyCI crypto indexes, we can see interesting developments. The LyCI family consists of three indexes. Each of these three indexes has a corresponding utility token to make the indexes investible: ‘LyCI’, ‘Pay LyCI’ and ‘Smart LyCI’. LyCI follows the top 25 crypto projects, the Pay LyCI concentrates on those that offer payment coins and the Smart LyCI tracks the success of the projects that build platforms to run smart contracts. We highly encourage you to take a closer look at them all, this is true innovation in the industry!
If LyCI is composed by almost 60% of Bitcoin, this generally reflects the sentiment towards the “traditional” crypto market. Bitcoin has risen quite high recently and lost some 25% again, presumably on the news from the US where the president claimed himself “not a fan of Bitcoin” and the Federal Reserve said that the project raises “serious concerns”.
It is interesting though to see how the other two LyCI indexes reflect the developments on their corresponding markets. While there are more and more supporters of the smart contract technology applied to any field of economy (wherever a contract may be signed), the price of the Smart LyCI token has dropped significantly. At the time of writing, it’s around 143 USD, which, paradoxically, reflects quite low interest in the projects that develop smart contract solutions.
While the Pay LyCI is weighted at around 208 USD, which shows that the projects building payments solutions have recently received more attention and more investment. Could this mean that this interest in the Payment sector has been brought by the hassle around Libra — which is fundamentally a stable coin designed to serve as a means of international payment? This remains a topic for discussion. What is important, however, is that mass adoption is definitely becoming closer and closer with every passing day!