The cryptocurrency market can be volatile, and the price of any given cryptocurrency can go up or down by double-digit percentages in either direction on any given day.
There are many factors that influence the price of cryptocurrencies, including new technology or regulation surrounding that specific cryptocurrency. You need to be aware of what these key factors are, in order to make informed investing decisions.
Here’s everything you need to know about how cryptocurrency prices move in the market!
What is cryptocurrency price?
There are two types of cryptocurrency prices, a market price and a value. A cryptocurrency’s market price is determined by how much people are willing to buy or sell it at that particular moment. The cryptocurrency’s value is what it will be worth on the market at any given point in time. A cryptocurrency exchange development company can help you determine your market price.
What moves crypto prices up or down in general?
Cryptocurrencies are volatile, so their prices may go up or down at any time. But what determines their value? One factor is market sentiment. If people are excited about a cryptocurrency, then the price will likely be higher.
On the other hand, if people are pessimistic about it, then the price will likely be lower. Another factor is how much money cryptocurrency exchange development companies have invested in them. Investments increase demand for a cryptocurrency and can push its price up.
Finally, a third factor that affects cryptocurrency prices is supply and demand within exchanges.
Which factors influence crypto market movements and which do not?
Crypto market movements are influenced by many factors. Some factors such as government regulation, technology adoption and more are not actually all that influential on crypto market movement. However, some factors such as cryptocurrency exchange development companies, investor sentiment and others can have a significant impact on how much prices move up or down.
Government regulation
Like with any currency, cryptocurrency price is determined by supply and demand. However, unlike with regular currencies, cryptocurrency prices are not dictated by a single nation or regulator. A country’s central bank could change the value of its currency relative to other currencies and can do so at will. When it comes to cryptocurrencies, there is no central regulator that can manipulate prices for political purposes like some governments are known for doing with their national currencies.
Inflation of Fiat Currency
Fiat currency is a currency that derives its value from government regulation or law. It may also be called legal tender. An inflation occurs when there are too many units of fiat currency in circulation, which lowers the purchasing power per unit, and essentially makes each unit worth less. When inflation rises, prices generally go up as well.
Cryptocurrency exchanges
A cryptocurrency exchange is a place where people can trade cryptocurrencies for other assets, such as fiat currencies or other digital currencies. There are many different exchanges, each of which offers a different set of digital and fiat currencies for trading.
Market Cap
The market cap of a cryptocurrency is a number that describes the coin’s price multiplied by its circulating supply. It shows how much money would be needed to buy up all of the coins in circulation, so it gives you an idea of how much demand there is for a particular cryptocurrency.
Scarcity
There are many factors that affect how cryptocurrency prices move, with scarcity being one of them. Scarcity is related to supply and demand. It is a measure of how hard it is for people to access an item. If people can easily get something, then there will be more buyers than sellers, driving up the price. If it is hard for people to get something, then there will be more sellers than buyers and the price will fall.
How do technical indicators work?
Technical indicators are a set of rules that traders use to analyze a coin’s price movements, volume, and other data. They identify trends and changes in momentum. Technical analysis is used by traders to predict where cryptocurrency prices are going.
- Technical indicators can be classified as either lagging or leading indicators.
- Lagging indicators include things like moving averages, which capture information on how prices have been trending over a certain period of time.
- Leading indicators include things like relative strength index (RSI), which identifies when the momentum of a trend is slowing down or speeding up.
Key Takeaways
These factors are supply, demand, market sentiment, media coverage and trading volume. Crypto wallet development company believes these factors have an impact on crypto prices but not as much as speculation.
For example, even though most traders consider Bitcoin’s volatility an advantage for short-term trades, some of them also see it as one of the biggest risks for long-term investors. Crypto wallet development company suggests investors pay attention to crypto assets with lower volatility such as Dash (DASH).
