What Exactly Determines Whether a Cryptocurrency Will Go Up or Down? | Coinparative
Coinparative

  • News
    • Crypto News
    • Blockchain News
    • Altcoin News
    • Press Release
    • NFT News
    • Metaverse
    • Web3.0 News
    • Trending
  • Insights
    • Explainer
    • Research
  • Guides
  • Market
    • Market analysis
    • Market News
    • Reviews
    • Price Index
  • Videos 🚀
No Result
View All Result
  • About Us
  • Contact
  • bitcoin
    Bitcoin(BTC)
    $0.00-0.74%
  • ethereum
    Ethereum(ETH)
    $0.00-1.91%
  • usdex-stablecoin
    USDEX(USDEX)
    $0.00-0.53%
  • tether
    Tether(USDT)
    $0.000.020%
  • usd-coin
    USD Coin(USDC)
    $0.000.090%
  • binancecoin
    BNB(BNB)
    $0.00-0.59%
  • ripple
    XRP(XRP)
    $0.00-0.58%
  • binance-usd
    Binance USD(BUSD)
    $0.000.090%
  • cardano
    Cardano(ADA)
    $0.000.360%
  • dogecoin
    Dogecoin(DOGE)
    $0.001.54%
  • matic-network
    Polygon(MATIC)
    $0.00-2.78%
  • okb
    OKB(OKB)
    $0.006.82%
  • solana
    Solana(SOL)
    $0.00-1.31%
  • staked-ether
    Lido Staked Ether(STETH)
    $0.00-1.79%
  • polkadot
    Polkadot(DOT)
    $0.00-1.16%
  • shiba-inu
    Shiba Inu(SHIB)
    $0.000.690%
  • avalanche-2
    Avalanche(AVAX)
    $0.0011.08%
  • litecoin
    Litecoin(LTC)
    $0.00-0.30%
  • tron
    TRON(TRX)
    $0.00-1.61%
  • dai
    Dai(DAI)
    $0.00-0.04%
View All
Coinparative
Home News Crypto News

What Exactly Determines Whether a Cryptocurrency Will Go Up or Down?

April 3, 2022
in Crypto News
245 7
A A
0
What Exactly Determines Whether a Cryptocurrency Will Go Up or Down?
Share on FacebookShare on Twitter


Cryptocurrencies came into existence in 2009, with the launch of Bitcoin. For many years, these currencies were primarily used for black market transactions as they offered high levels of anonymity. However, they have now become extremely popular investment options. Anyone who has thought of investing in cryptocurrencies understands how this market can be extremely volatile. But what exactly influences the price of cryptocurrencies? And how can you determine whether the prices will go up or down? Let’s find out in this guide.

Supply and Demand

One of the key factors that influence the price of cryptocurrencies is their supply and demand. At any given time, you will be able to determine the supply of a particular cryptocurrency, and if this supply gets too high, the price will likely go down. However, you also have to consider the demand for the cryptocurrencies, and this can be affected by lots of factors.

The most important factors that can determine the currency demand are its awareness and level of utility. As an example, the demand for Ethereum has increased because of the increased adoption of decentralized finance projects. It is worth noting that some currencies have a maximum supply, and others simply burn existing currencies to limit their supply. This way, the projects are able to prevent the slowing down of inflation.

The Mining Costs

New cryptocurrencies are produced through a process known as mining, and this task requires very high amounts of computing power. As more people try to mine these currencies, the computing power required will increase significantly. This cost will have to be factored into the price of the currencies. Since miners are essential to the functioning of the blockchain, the price of the cryptocurrencies will go up as long as there is a demand for the currencies.

Central Bank Interest Rates

Central banks such as the Federal Reserve and the Bank of England have a major impact on the cryptocurrency market. They regularly set interest rates for major commercial banks, and this can have a major impact on various investments, including cryptocurrencies. This is actually one of the key factors that have led to a steep decline in the price of cryptocurrencies in 2022. Since the Fed has indicated that it may increase interest rates in its next meeting, more people are dumping their cryptocurrencies for more defensive investments. This is because higher interest rates signal that the economy will slow down as businesses will be willing to take lower credit.

Ease of Purchase

If a cryptocurrency is easier to purchase, more people will be willing to invest in it. The main factor that determines the ease of access is the number of cryptocurrency exchanges that support the currency. Some exchanges will allow you to swap cryptocurrency pairs, and this can make it more expensive to purchase the currencies.

Decisions Made By Major Governments

Some governments have embraced cryptocurrencies while others have outright banned these currencies. Decisions made by countries like the USA and China have made decisions that have had major impacts on the prices of these currencies.

Conclusion

Cryptocurrencies are some of the most volatile investments. As an investor, it is essential to understand the factors that impact the prices of cryptocurrencies. Some of the most important factors include the supply and demand of the currencies, the mining costs, the central bank interest rates, the ease of purchase, and the decisions made by major governments. You should also note that inflation will affect the prices of these currencies. By evaluating these factors, you will be able to determine whether the prices of cryptocurrencies will rise or fall.

Sources:
• https://www.forbes.com/advisor/investing/fed-raises-interest-rates/
• https://www.cnbc.com/2022/01/24/what-investors-should-know-as-bitcoin-drops-50percent-from-its-all-time-high.html
• https://www.nationalworld.com/lifestyle/money/why-is-crypto-down-today-cryptocurrency-market-price-crash-2022-bitcoin-ethereum-cardano-xrp-prices-3239302
• https://www.fool.com/investing/stock-market/market-sectors/financials/cryptocurrency-stocks/value-of-crypto/
• https://learn.tradimo.com/cryptocurrencies/crypto-value

Source: Gravitate

Share196Tweet123Share34Pin44ShareSend

Related Articles

Binance.US to Acquire Voyager Assets for $1 Billion
Crypto News

Binance.US to Acquire Voyager Assets for $1 Billion

December 20, 2022
1.4k
Democratic party will return over $1 million to FTX investors
Crypto News

Democratic party will return over $1 million to FTX investors

December 19, 2022
1.4k
BIS Now Allows Banks to Hold 2% of Reserves in…
Crypto News

BIS Now Allows Banks to Hold 2% of Reserves in…

December 18, 2022
1.4k
Silvergate Bank faces lawsuit over FTX and Alameda dealings
Crypto News

Silvergate Bank faces lawsuit over FTX and Alameda dealings

December 17, 2022
1.4k
Amber raises $300 million to laser focus on institutional clients
Crypto News

Amber raises $300 million to laser focus on institutional clients

December 16, 2022
1.4k
Changpeng Zhao Defends Binance During CNBC Appearance
Crypto News

Changpeng Zhao Defends Binance During CNBC Appearance

December 16, 2022
1.4k
Load More

Discussion about this post

Coinparative

2022 © All Rights Reserved.

Coinparative specializes in the digital News and research on cryptocurrency, Digital Assets and Blockchain

  • Advertise
  • Privacy Policy
  • Terms
  • About Us
  • Contact

Follow Us

No Result
View All Result
  • News
    • Crypto News
    • Blockchain News
    • Altcoin News
    • Press Release
    • NFT News
    • Metaverse
    • Web3.0 News
    • Trending
  • Insights
    • Explainer
    • Research
  • Guides
  • Market
    • Market analysis
    • Market News
    • Reviews
    • Price Index
  • Videos 🚀

2022 © All Rights Reserved.

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
DON’T MISS OUT!
Subscribe To Newsletter
Be the first to get latest updates and exclusive content straight to your email inbox.
Stay Updated
Give it a try, you can unsubscribe anytime.
close-link
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.