According to the conclusions of the new eToro study, crypto assets tend to move more in the course of a week than in the first hour or first day after a major development.
eToro, a leading multi-asset broker, has published a quarterly report on the crypto market for Q3 2020. The document, entitled „What Moves the Prices of Cryptoassets,“ examines in detail the main factors driving cryptocurrency prices upwards.
The 15 „significant developments“ that directly affect the value of a crypto asset include mergers, financing, halving, partnerships, staking and announcements. Researchers analyzed how cryptocurrencies react one hour, one day, and one week after Bitcoin Trader the developments become widespread.
How fast do crypto assets react to news?
According to data from eToro and The Tie, cryptovalues usually increase the most within a week of any announcement.
During the first hour after a news item, crypto assets tend to gain about 0.5%. A poor market reaction is expected as it takes time to circulate the information.
In the first day after an announcement, crypto assets are likely to grow between 0.8% and 1.3%. It is understandable that crypto assets will see a greater increase over the course of the day than the first hour as the news spreads.
In the first week following an announcement, crypto assets often show gains of between 2% and 8.2%, the largest of all ranges.
Which factor is most likely to cause an increase?
At least in the short term, of all the significant developments, mergers and acquisitions cause the strongest rises; halving, financing, partnerships and staking lag behind acquisitions in daily, hourly and weekly performance.
Average price change in crypto assets following significant development
The average price variation of crypto assets following a significant development. Source: eToro
In addition, researchers at eToro found that mergers and acquisitions also involve a 90% probability of a positive return over the week:
„Mergers and Acquisitions are remarkable, showing a 90% probability of a positive return after one week, with an average of 8.23%. This strong performance is probably due to the fact that much of the news of this type about tokens is well kept secret. In addition, news about Mergers and Acquisitions in the token context usually aims to add further value to an ecosystem.
The likelihood of a crypto asset price increase after significant development
The probability of an increase in the price of a crypto asset after a significant development. Source: eToro
Preventing data leaks
The information presented in the eToro Q3 report is likely to be more useful to institutional investors and professional traders than it is to retail investors.
However, the data provides a unique insight into the type of fundamental factors that influence the price of crypto assets. They also point out that exchanges, projects and other related activities need to be more cautious in handling potentially sensitive announcements and significant developments.
The report shows that announcements related to a project usually have a strong impact on the price of the crypto assets involved. Therefore, it is critical that interested parties or companies ensure that no relevant information is disclosed to prevent market manipulation.