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.
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.
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.
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
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.
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.
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.
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.
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.