Cryptocurrencies Price and Market Cycle Analysis Report

This report provides a comprehensive analysis of cryptocurrencies, focusing on price fluctuations and market cycles. It begins with an introduction to cryptocurrencies, including Bitcoin and Altcoins, and their decentralized nature. The literature review explores the correlation between cryptocurrencies and fiat currencies, the impact of supply and demand, and the influence of macro-financial trends. The report aims to define the structure of cryptocurrencies, determine the reasons for price decreases, and identify factors supporting price increases. It examines the impact of government regulations, large currency holder risks, hacker attacks, media influence, and lack of awareness on cryptocurrency prices. The report also discusses market forces and specific reasons that tend to increase the prices of cryptocurrencies, providing insights into market dynamics and investment strategies. The report covers various research methodologies and provides a research plan for further analysis. The report also discusses the factors influencing cryptocurrency prices and market cycles. It also covers the impact of supply, demand, and market trends. The report concludes with the analysis of the factors that support the increase of the price of cryptocurrencies.

Cryptocurrencies Price and Market Cycle
Analysis

Table of Contents
INTRODUCTION ..........................................................................................................................1
Literature Review:...........................................................................................................................3
Research Approach and Methodologies .........................................................................................9
Research Plan ...............................................................................................................................11
REFERENCES .............................................................................................................................12

INTRODUCTION
A cryptocurrencies are completely decentralized, stable, virtual currency with a
cryptographic control of its development (Sun, X., Liu and Sima, 2018). Cryptocurrencies are
not distributed by central banks as well as are not based on bank regulations for their price.
Unlike normal currencies in which new currency could be added via Quantitative Easing (QE) in
money supply, crypto-currency rates are solely supplies and demanding dependent. The very first
cryptography-currency was Bitcoin, originally founded in year 2009. There are more than 800
substitute cryptocurrencies presently available, named Altcoins, like Litecoin, Ripple and
Ethereum. Cryptocurrencies are quite identical to valuable metals, from that their formation is
regulated and certain have a restriction on the quantity of transactions, just as precious
compounds have small minable amounts. Cryptocurrencies' market capitalisation reaches sky-
rocketed, since public acceptance has risen significantly. In Dec, 2017, bitcoin's prices peaked at
around USD 19.361 per bitcoin. Along with proliferation of blockchain innovation, this buzz has
strengthened Initial Coin Offerings (ICOs) as just a modern funding method for ambitious
businesses with cryptocurrency-based business structures. Blockchain-based companies usually
build their specific cryptocurrencies within an ICO and disperse this against bitcoins or tender
among buyers. Since 2016, approx 767 ICO projects have collected above around $12.0 billion,
demonstrating the importance of ICOs to growth of enterprise finance (Bentov, Gabizon and
Mizrahi, 2016).
Background
Cryptocurrencies are indeed an unique mix of several features: they offer privacy, their
are autonomous of the central authority but they provide security against double expenditure
violence. The purpose of this research is to catch patterns in the field of substantial price
fluctuations for cryptocurrencies and clarify their causes. So far, businesses work has offered few
visibility into the strategic importance of cryptocurrencies. Many current cryptocurrency systems
are based by software engineers that focus primarily on the functionality and protection of these
schemes (Yi, S., Xu. and Wang, 2018). This ensures that agreement is established and between
verifiers on the right documentation of activities such that consumers can be confident of
obtaining and retaining balanced ownership. It is observed that a dealing on digital platform is
basically depended upon block chain which guarantee the apportioned verification, modifying
the storage so that records are always as per the transaction histories. A block is a series of
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exchanges which happened among the cryptocurrency consumers. A sequence is formed from
such frames comprising the past detail of transactions which enables the development of a
database in which the sum of accounts or currency a consumer holds can be checked publicly.
The primary concern for consumers when adopting a cryptocurrency is the question of double
expenditure: after making a sale, a customer tried to convince the verifiers.
Aim and Objective
The research project aims at analysing and defining main success of Cryptocurrencies
Price and Market Cycle Analysis drivers and growth strategies that would help strategic progress
to improve results in the digit market.
The main objective are:
 To define the structure of cryptocurrencies by the length of their existence.
 To determine the reason of the most crucial decrease in prices of cryptocurrencies.
 To figure out the factors which support in the increase of the price of cryptocurrencies.
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Literature Review:
To define the structure of cryptocurrencies by the length of their existence:
From economic perspective, the level of correlation between cryptocurrencies as well as
fiat currencies, variables affecting Bitcoin and its price volatility are commonly addressed
(Guides, 2018). Currencies utilized in highly multiplayer online role-playing games (MMORPG)
and consider to get a market volatility similar to bitcoin. Bitcoin is the most effective
cryptocurrency because it is least predictable, as well as the exposure that bitcoin attracts is
determined by both uncertainty and the volume finally realized day before. The Bitcoin industry
is extremely speculative, as well as ARCGARCH is the ideal model for forecasting bitcoin
prices. Cryptocurrencies are integrated, but separate from many other capital markets like the
gold or S&P500. For the very first day, higher IPO returns result in higher IPO activity by
around six months. In certain words, after they consider other companies getting high
preliminary returns, more businesses go public. For starters, IPOs released during hot quarters
are much more probable to liquidate than cold quarters ones. Research shows comparable results:
IPO size is responsive to contemporary IPOs, and if companies in specific industry become
public, this is representative of the same industry's overall growth prospects and influences
market cycles for IPOs. Bouri et al. (2016) analyzed the effect of various variables on Bitcoin
price. The variables were classified into three types: BitCoin supply & demand market
influences, macro-financial trends and Bitcoin customer attractiveness. BitCoin's supply and
demand economic factors is determined by the no. of Bitcoins' cumulative mined blocks, the
average no. of transfers and no. of accounts used with a specific day.
Lehdonvirta & Castronova, (2014) states that apart from these invention have the main
objective is to reduce the friction or usage of currency in making payment and other financial
dealing. This will definitely increase use of e money which directly increase and develop the
virtual and digital money. Most importantly the objective among the most popular blockchain so
far, Bitcoin, is completely for firms and other individuals i.e. eliminate trading costs.
Furthermore it also have an added goal of ending any need for monetary middlemen entirely
which will reduce the chances of black money movement and currency tempering. By Brito et al.
(2014) it is defined that any price fluctuations can be seen as an barrier to its broader use as a
currency, and proposals have been made for the design of financial products to help reduce
volatility. High cost instability and speculation behavior are in comparison to low current rates of
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cryptocurrency use as method of payment. In regards to the presence of a central authority to
exert power over issuing, fiscal policy and monetary reserve management in unified
cryptocurrencies, a national government may step in to regulate supply of money and reversal
payments from anywhere (Guo and Li,2017). Therefore, Bitcoin is regarded as decentralized
money value which ease the process of buying and selling for the uses as it completely remove
any kind of financial middle man making misuse of paper currency. The lack of a centralised
government in cryptocurrency means users regulate certain things as per the processing power
they bring to the system. However, payments are usually void, since there is no appeal authority.
In the opinion of Maurer et al. (2013) the main point which can make a distinction between the
usefulness of digital and virtual currencies applies to the contexts in which they function. On the
other side it is also determined that under terms of convenience, this has become an essential
feature at current, Bitcoin is restricted to people via Internet services. It turned out to be
important as internet is a necessitates and needed a broad adoption in developing world and
countries, where electronic money was very common in phone and scrolling communication
networks.
To determine the reason of the most crucial decrease in prices of cryptocurrencies.
Macro-financial growth has been evaluated using oil prices and market indexes. Bitcoin's
attractiveness to consumer has been calculated by the no. of new comments and no. of new users
on Bitcoin's largest online platform and no. of viewpoints on words Bitcoin and Wikipedia. The
authors succeeded in confirming the effect of Bitcoin's supply/demand market factors and
Bitcoin's attraction to consumers on Bitcoin's price, not confirming the impact of macro-financial
innovations. Using statistical techniques, Ciaian, Rajcaniova and Kancs, (2016), revealed that the
changes in Bitcoin prices can be separated into two cycles of different features. The very first
period operated from Bitcoin's launch in Jan, 2009 to Sep, 2013. The second cycle commences in
Oct, 2013 and keeps running until now (Bejaoui, Sassi and Majdoub, 2019). Bitcoin blends US
Dollars and Gold commodities. Bitcoin may be used as means of exchanges while, at the very
same time, it's an appropriate tool for cautious investors to maintain the interest. From the IT
context, most frequently discussed anonymity, stability, appropriateness of individual
technological parameters (block location, block processing time, range of mining methodologies)
and the enhanced functionality of cryptocurrencies in everyday life. Baumann, Fabian and
Lischke, (2014) suggested a method to track the existing holder of the fiscal resources stored on
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address inserted in cryptocurrency. The method was focused on transactions charts review and
commonly accessible information relevant to the specific addresses.
Throughout block mining, Krol et al. (2014) examined possible behaviors. They
presented the idea of Goldfinger attack which could contribute to the demise of the particular
cryptocurrencies. The researchers made a hypothetical estimate, wherein conditions the attackers'
benefit would be greater than the damage expenses incurred by them. McSherry, 2014 suggested
a new currency, named Zerocoin, which would enable a greater degree of transactions
confidentiality than Bitcoin accomplished. Bonneau et al. (2015) experimented with
cryptocurrencies mining stabilities utilizing mining pools. Possible attacks on the mining process
were critically analysed. They examined threats for cryptocurrencies users. The produced a
summary of alternate mining techniques and solutions to confidentiality. Crypto currencies
enforcement and their misuse for criminal activity is most commonly discussed from a
legal/legislative perspective (Ulusoy and Çelik, 2019). The European Banking Authority (2014)
has identified 70 threats that can present when using cryptocurrencies. Dual recognition of risk
has been developed. The first category was rendered by risk magnitude, and second classification
as undermined by defined danger. It is a decentralised virtual currency which is secured by
cryptography and a medium of exchange based only on internet.
Fluctuations of prices of cryptocurrencies are operated by many elements some of them
are mentioned below:
Government regulations: As cryptocurrencies are decentralised currencies that means
government do not have any control over this currency as they have on fiat currencies this results
into fluctuation in prices. As Japan gave cryptocurrency a legal existence of identifiable as a
legal currency in April, 2017. on the other side getting banned in some countries caused crypto in
decreasing to their prices. As this decreased the tax revenue of government as government lost
control over money market.
Large Currency Holder Risks: There were some rules made for withdrawal of crypto
currency. As many cryptocurrencies do not allow withdrawal of profit for next 24 hours and
during this period the currency may again fall or rise and this created distrust among holder of
crypto. As crypto started declining rather than giving profit it started to give losses (Lyushenko
and Holiachenko, 2019).
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Hackers attack: The network of crypto which is known as block chain is not safe to deal
in. As many hackers intentionally hacked the block chain and influenced the prices of
cryptocurrencies this hampered the trust of holder of crypto.
News in media: This always seen that news media always hyped the news about
cryptocurrencies. Media channels always displayed all negative news about crypto and
influenced people.
Lack of awareness: As of now most of the people are unaware about the concept of
cryptocurrency and how it works on block chain. The inventor of crypto never wanted to have
transparency about the mechanism of crypto. Basically it is dependent on demand supply
mechanism but still the proper working were never disclosed by the companies.
To figure out the factors which support in the increase of the price of cryptocurrencies.
In the opinion of ANDREW BLOOMENTHAL, (2020), economies that do not have set
foreign currency levels will partly regulate how much more of their currency accumulates by
raising the rate of return, modifying capital requirements or accessible-market activities. There
are some specific reasons which tends to increase the prices of cryptocurrencies that are
discussed underneath:
Market forces:
In the modern market, as almost each sort of assets, demand and supply have a major and
big role in deciding the price of the cryptocurrencies. Likewise, the supply of token is seems to
be the most crucial and single element in estimating the degree where a price of token is
appreciated. It is also determined that in continuous fluctuated marker and insufficient sources
the currency movement the higher the value of every coin would be perceived and all the other
elements are consider to be equal which tends to increase the price level of cryptocurrencies
(Senthuran and Halgamuge, 2019).
The perceived utility of the project:
In the present dynamic market conditions, the prices of crypto is being ultimately going
to be underpinned by the total usage as it is related with the virtual of entire goods and services.
It is stated that in case if there is another crypto-currency like Bitcoin then the it would be able to
retain the interest of stakeholder and other interested parties for long run because of number of
uncertainties. However, if a particular platform provides anything new and seems to use the
block chain to comprehensively modify the way in a large form at global level. Such as supply
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chain, financial market as well as interest which intend to increase the price of cryptocurrencies
and very quickly increase the perceived utility (Ogorevc, 2019).
Political risk
Political risk surrounding national currencies may also influence Bitcoin's valuation when
individuals use it to protect against price movements in a specific economy or they need to move
large quantities of money out of a region or currency rapidly (Bonneau and et. al., 2015). In the
entire world there are number of forces and takes which provide the framework related to
regulate the cryptocurrency. Such as in several nation these currency are accepted sufficient to be
regarded as a legal tender and in many other nation it is outright banned. Which implies this
could depend on the number of transfers when nations work out how to control cryptocurrencies.
Unless the government regulates too much by legislation it could have a detrimental effect on a
coin's quality. At the other side, it may be encouraging new consumers if nations control it
properly.
Regulatory moves
In the opinion of Chrisjan Pauw, 2018 financial institutions worldwide had to make up
ground to Bitcoin's development. Of starters, they need to consider how well the taxation system
should handle it, or even whether and also what legislation relates to its use. For example Two
events in particular highlight the impact regulations can have on the price that are listed
underneath:
 The declaration that Bitcoin will be deemed a legal currency in Japan propelled Bitcoin's
value up 2 percent over just 24 hour, but for the next 2 months raised the price worldwide
by 160 percent (DĂNILĂ and ROBU, 2019). Chinese decision to close many Bitcoin exchanges and prohibit basic coin initiatives (a
type of fundraising mostly paid out with cryptocurrencies) sent Bitcoin's prices
continuing to rise by 29 percent in 24 hours.
Mining
The major factor which could also relate to the crypto-currency value is how complicated
it can be to extract a cryptocurrency. Mining is the mechanism by which transactions are
authenticated and put onto the database. For example, the mining process of Bitcoin which was
consider to be the hard process to mine and as a results is might not be such useful and profitable
in case it these currencies are used. That's because there are several cryptocurrency pools
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devoted to processing the existing bitcoins because the more investors there have been, the easier
it is for themselves to mining and this will be leading to a higher cost for bitcoin (Bentov,
Gabizon and Mizrahi, 2016).
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Research Approach and Methodologies
In the context of respective research the work is being carried out in three stages. During
the first step the data is collected regarding the regular prices of cryptocurrencies in current
market. The correction of the acquired information was rendered during the second stage.
Throughout the third stage, the main focus is to address the assessment for variety of virtual
currency in order to determine the most and least effective cryptocurrencies (European Banking
Authority, 2014).
Research method: To gather information relevant to prices of cryptocurrencies
quantitative research approach is selected that helps to collects statistical data and analyses
relevant facts. This is mainly based on extracting the ideas and concepts of participant and
responded related to the topic in a specific time frame.
Research Approach: To complete the specific research inductive approach is used which
is beneficial in collecting specific information to the topic. This technique is used by scholars to
gather data associated with specific research topics. There is a discovery of trend through
analysis as well as the evolution of the principles of study.
Research Philosophy: A research philosophy is the perception that this is a way of
gathering, determining and utilizing information related to the occurrence. It is categorized into
two types such as scientific philosophy that is positivism and interpretation or interpretivism. In
order to complete the research work and determine the information related with pricing of
cryptocurrencies interpretivism philosophy is being applied which support in making the correct
decision.
Data collection tool: In order to perform a research specific methods and tools are
required which support in collecting the authentic and detail information. Data gathering
component of analysis in which all areas study including curriculum of social and physical
sciences etc. The data collection is focused on the secondary and tertiary knowledge in which
primary data investigator collects information on his own and historical information through
secondary use. Some types of tools that can be used by research are interview, questionnaire,
survey and observation etc. In the context of this research topic questionnaire data collecting tool
is selected. In this approach, researchers compose sample questions regarding research topics and
seek questions from the audience about their opinions (Baumann, Fabian and Lischke, 2014). It
will help make sure that the questions included in the test adequately cover the investigation
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