Cryptocurrencies are digital or electronic currencies that work on cryptographic technology. These digital currencies can be used for trading, investment and also in exchange for goods and services. Cryptocurrencies hold various opportunities and potential to be used for different purposes. At present, it is becoming one of the most popular assets for trading as it shows the chances of making huge profits.
From the beginning, cryptocurrency is seeing slow but increasing growth, decreasing rate and some sudden changes. As other trading assets are affected by different factors, the same happens with digital currencies too. A cryptocurrency’s price is driven by multiple factors. The rate of coins depends on its supply and demand in the market. But this is not the single factor affecting its price, there are other factors too. So, in this blog, we will learn what are the factors that affect any cryptocurrency’s price movements.
Factors Affecting Crypto’s Price
Like any other trading asset in the market, a crypto’s price also depends on various factors. These factors that have a huge impact on the rate of digital currencies are as follows:
Demand and Supply
As discussed earlier, a crypto’s price depends on its demand and supply in the market. When crypto is in demand and increasing its popularity, then its price will also increase. But when there is very low demand, the price will decrease. These changes in demand and supply of the crypto coin result in changes in its prices.
Digital assets trading has high volatility. This increased volatility attracts traders to trade cryptos. Whether experienced or small traders, all who are enthusiastic enough to trade assets that have high price fluctuations opt for trading virtual currencies.
Regulation of the Cryptocurrency
This is one of the most important factors. Regulation of the digital currencies in any country has a serious effect on the cryptocurrency market. Ban on any particular virtual currency or whole industry influences the price movement. This stops traders from buying and trading cryptos and hence, decreases its price. But on the other hand, when any business or enterprise announces that they accept crypto coins as payment, it increases the coin’s popularity and price.
Some cryptocurrencies have some specific use, especially the ones that are most popular. For example, Ethereum allows people in creating their own DApps. So, if a crypto coin has no purpose, it will obviously have no popularity which will lower its price. A crypto coin needs to have some practical use, then only it will be in demand which will resultantly reflect in its price in the market.
Availability on Crypto Exchanges
If you are willing to trade any virtual asset, you need to trade on a cryptocurrency exchange platform such as PCEX.io etc. Just like the traditional exchanges, you can trade cryptocurrencies at crypto exchanges. So, for a crypto coin to increase its demand, it needs to be available on these crypto exchanges.
When new digital currencies are listed on an exchange, it attracts investors and traders. And when these coins are available among the traders, they will choose to trade that crypto. Along with availability, the listing of coin on an exchange is also important. So, if any crypto coin is listed among the top 10 or 20, then traders will opt to trade that crypto coin in comparison to any other coins. All these increase the price of the cryptocurrency sharply.
News and Media
News about any virtual asset affects its price heavily, whether it is positive or negative news. The volatility of a cryptocurrency rate is highly based on the news that is shared on the different media. For example, if news shows that particular crypto has been hacked, this will surely lower its price. But if there is news about a digital coin that is seeing a rise in its popularity, this will help in making its price go up.
Hence, in conclusion, we can say that each and every factor that is mentioned above has a great impact on a cryptocurrency’s price. In the cryptocurrency world, news and social media especially have a huge impact on the market. Any comment by professionals and famous personalities on social media can influence people. So, consider these points when you are going to choose any crypto coin for trading, so that your trade is profitable.