THE 5 AREAS THAT DRIVE CRYPTO MARKETS 

Our Aunt Mary makes family members sign an NDA if they want her cake recipe.

(Not a joke).

But the Milk Man? The Milk Man ain’t like Mary.

We share our recipes freely, and totally unprompted.

Today we’re talking about the most important recipe of all – the five areas that drive crypto markets:

Alright, enough dilly-dallying – let’s break these suckers down as simply as humanly possible…

1/ Innovation

Innovation = new use cases = new users = new token holders and/or more transactions = increased demand (plus more tokens burnt across blockchains like Ethereum and Solana etc.) = number go up over time.

 Note: the inverse is also true. Lack of innovation can hurt markets.

2/ Regulation

Better regulation = less risk for users & institutions = more investment / funding = more use cases (see above) = more users = number go up.

 Note: the inverse is also true. Poor regulation can be a gut punch to markets (looking at you, Gary).

3/ Macro

To put it simply: when people have more money, they can invest more of it into markets.

Fresh cash entering the market = number go up.

…ok, but how does fresh cash find its way into the market en masse?

The two biggest factors are:

Rate cuts = lower loan/credit repayments = more money in everyone's pockets / incentive for folks to take out loans and get-to-spending = a healthy economy = number go up

QE = central banks purchasing shares in major financial institutions = financial institutions' stock going up = the rest of the market following suit over time (number go up)

 Note: the inverse is also true. A lack of liquidity can cause markets to stagnate and stumble.

4/ Narratives

All that fresh cash we were just talking about? It flows to where the attention is.

If certain tokens or use cases gain attention in the world via new narratives, money tends to flow in their direction (often regardless of fundamental innovation).

5/ Wild Cards (War, Currency Failures, Hacks, and Scams)

It’s about to get rough – brace yourselves…ready? Ok, let’s go.

War (on a large enough scale) has a habit of spooking market players into selling out of risk assets, including – but not limited to: crypto.

(Look at what happened last week with the news surrounding Iran/Israel).

Currency failures also have the potential to spook markets, but they tend to push investors towards scarce assets like (you guessed it): Bitcoin.

Meanwhile – failures, hacks, and scams can deter new users from entering the market, force harmful regulation and spin bad narratives.

No. Bueno.

Ok, so those are ingredients…but what's the actual ‘number go up’ recipe?

Think of new innovation, clear regulation, strong narratives, an increase in global peace, and a decrease in failures, hacks, and scams across the crypto space as a solid base for our crypto cake.

But the ingredient that makes it all work – the self raising flour (if you’ll allow us to truly beat this analogy to death) – is an increase in global liquidity (aka: cash floating around the system).

Global liquidity rises and falls over a four year period – helping to push asset prices up and down in the process.