Factors that determines the price value changes of cryptocurrency

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Avatar for Eybyoung
4 years ago

I have written before about the factors that affect the volatility of the cryptocurrency but now I would like to write about the factors that determine the price value changes of crypto assets. I dig deeper into why crypto-asset fluctuates so much, what are the reason behind it.

Cryptocurrency is very volatile, nobody can predict when the price value goes up and down. But some factors can determine why it is subject to volatility. Some people or usually the smallholders are anxious about volatility because sometimes the value drops big time causing them losses of money, but major investors and big holders see this as an opportunity because volatility determines the movement of the coins whether it's good to invest or not by just seeing the price fluctuations, it determines the “in and out of investors”.

Why does the Cryptocurrency price fluctuate so much?

These questions come to our minds often why cryptocurrency fluctuates so much, and the best statement to answer is what drives the price movement is that because it is still a “nascent” stage. Nascent means, just coming into existence and beginning to display signs of future potential.

The result of this newness is the high volatility in the industry. A market that is yet to find its set of logical use cases, cryptocurrency is still at a very nascent stage. It was majorly driven by the experimentation of investors to get a sense of how the value fluctuates.

Factors that affect the changing price value of cryptocurrency

The scope of cryptocurrency application in the present day to the future uses of coin and series of other elements falling in the development of the cryptocurrency space are the factors that affect its price. Below are some reasons that bring out its price movement in the market.

  1. The utility of the coin- Any blockchain development company would tell that cryptocurrency should have a strong uses case to incentivize the holders of the coin. For example, the BCH, if many people utilized it and have many transactions the demand for the coin would be high that will result to have a greater value. The bigger role of cryptocurrency, the greater would be the market cap.

  2. Scarcity - A stable supply of any item increases its value in the long term for it is assumed that the demand will also increase in economics. Scarcity creates few circulations of the coin, some brands even used a burning mechanism, which means destroying a part of the coin supply. This will turn into an increase in the coin value for there is a lesser supply.

  3. Assumed Value - Center of the project developments are the basis of factors in cryptocurrency that ks only valuable in the market deem fit and market values. Here are some factors that determine the project value.

  • Constantly achieve milestones that were mentioned in the whitepaper.

  • Collaboration and partnerships with companies that are credible.

  • Launching of MVP or beta version

  • Cryptocurrency market growth

  1. Depletion of Fiat Currency - When fiat currency price declines, the price of the cryptocurrency will automatically go up, this happens because you will be able to get more currencies with your crypto assets.

  1. Mass adoption - The more the product is in demand the greater would be its cost. Massive adoption of cryptocurrency will make the price movement goes up that can be seen in the market. The more uses of coins the greater would be its overall cost.

  1. Whales - Those Bitcoin wallets that have around $1 billion are the whales. Price target the cryptocurrency making them very difficult to put in. As per Wimmer, the founder of Wimmet Financial LPP, “The crypto market is dominated mainly by ten big whales or privates. They are massive in the market and take up a lot of space and volume, so if you take the top ten or even 50 you will have a lot of volumes covered already. It is easy to manipulate the market so far”. Whales price manipulation is through the rinse and repeats trading techniques. A whale carrying huge crypto begins selling them lower at the market rate, this will create panic to small traders and they will also start selling their holdings. While the whales wait up for the panic state of cryptocurrencies until it reached rock bottom, then they will swoop and buy more of it when the price goes down under this method.

  1. Liquidity - Liquidity refers to the availability of liquid assets to a market or company. In the world of crypto, liquidating an asset means trading it for fiat currency (a national currency). However, the amount you will receive for liquidating an asset will largely depend on the market and exchange.

Regulations set also affects the price fluctuations of cryptocurrency, wherein the government is passing out regulations limited to a huge extent, keeping it from cryptocurrency mass adoption potential.

If I happen to mention the wrong information you are free to correct me, thank you for reading!

Source:

https://appinventiv.com/blog/understanding-cryptocurrency-price-movement-in-market/amp/

Image from Pixabay.com

P.S @Our.journey here is your request, I hope you learn something, and answers all your questions about why the BCH fluctuate so much, this applies not just to BCH but all cryptocurrency assets.

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4 years ago

Comments

So many new words, nakakahilo pa, ang daming di familiar sakin, need ko pang pag aralan ng igi, ang dami ko pang kelangang matututunan pala, ikaw pauwi na ako papunta palang haha. Maganda naman pagkapaliwanag mo, kaso nakakahilo talaga lalo na pag ang dami mong hindi alam na term my goodness, kahit may paliwanag diko pa din nagets yung word ee haha. Babalikan ko ulit to pag may enough knowledge na ako, save ko nalang muna for future reference, hehe.

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4 years ago

Very comprehensive article. Is no surprise cryptos are highly volatile, but other important characteristics (decentralization, privacy, usecases) makes them the best "kind of money" we have invented till now. Crypto is the future.

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4 years ago

Yes, I also believe crypto is the future. well yeah, you mention the three aspects which made cryptocurrency the best.

Thank you for appreciation and for dropping by 😊

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4 years ago

Nice one

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User's avatar Win
4 years ago

Wonderful

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User's avatar Win
4 years ago

some say that the whales has the greatest impact on the price of crypto. They even manipulate the price of cryptocurrency in purpose

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4 years ago

Yeah it is stated there that whales can manipulate it.

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4 years ago

I think Utility, Total Supply and Mass adoption are the most essential factors for a cryptocurrency to reach its intrinsic value in the first stage. Afterward, the demand and hype factors will determine the price range 😌😌

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4 years ago

You're forgetting a good usecase, or a new technology might pump the price as hell.

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4 years ago

That true.

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4 years ago

Yeah they are the most essential factors and the rest are just additional.

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4 years ago

You forget to mention low liquidity can cause extreme volatility.

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4 years ago

I also read that liquidity, I will add it later sir. Thank you.

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4 years ago

My pleasure.

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4 years ago

Mostly Whale's trading and Bitcoin price.

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4 years ago

Yeah mostly whales are in Bitcoin

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4 years ago

Nice one

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4 years ago

Thank you.

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4 years ago

Nice written

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4 years ago

Thank you 😊

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4 years ago

Thank you @Eybyoung for this outstanding article. I gain a lot of knowledge from your creative article. Definitely the more the people that execute transactions, the greater the demand for coins will be and will, therefore, push prices up.

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4 years ago

Welcome 😊 yes massive adoption will really push up the price of the coin. Thanks for giving me topic to write by your request 😊

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4 years ago

You are welcome. I have saved your creative article too.

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4 years ago

Thank you, I thought somebody save it 😆

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4 years ago

Big whales. Someday i can be one of the biggest whales that can manipulate the price of crypto currency. Walang masama mangarap 😂

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4 years ago

Ay sana all maging whales 😆 $1 billion in your wallet 😆😂😂

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4 years ago

Kaintindi kabag waray?

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4 years ago

hmm lemme try give me a word 😆

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4 years ago

[deleted]

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4 years ago

Oh talaga?naa na imuha? wifi man akon gamit gd.

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4 years ago

Idelete nani nako delikado 😂 ikaw ra ako giingngan kay ikaw ray Bisaya ari

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4 years ago

hahaha cge sure erase na salamat 😊

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4 years ago

Imention baya ko kung naa kana. Thank me later 😂

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4 years ago

Naka wifi man sad ko pero gidiscover nako ganiha buntag kay puro man way naa sa pinas naa ato nga feature

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4 years ago

So naa na imo karon?

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4 years ago

Kung kantigo lang ko magsend ug ss ari nagsend nako

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4 years ago

Yup. Naka syete nako 😂

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4 years ago

hala uyyyy ! nooooo asa ba sad kaha ko mangita ui wa ko kaila, naa ka telegram?

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4 years ago
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4 years ago

So tricky article. Yes, no one can't predict of the value of crypto.

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4 years ago

Why its tricky dear?. Yeah, nobody can predict it because the price value lies in these factors.

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4 years ago

Yes dear, crypto currency is something that like water fall.

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4 years ago

Yes, dear thanks for reading 😊

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4 years ago

Always pleasure my dear❤

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4 years ago

You're be good at this dear. Keep learning and growing ❤️ thanks for sharing

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4 years ago

Yes dear my eagerness to learn helps me grow and understand the nature of cryptocurrency. Thanks for reading, tsaka request kase yan haha nag study pa ako 😆

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4 years ago