3 Factors that Affect the Price of Cryptocurrency
Why is it that Bitcoin prices are surging for a couple of months, and hit a steep low all of a sudden? What influences the cryptocurrency prices, helping you decide when the best time to make an investment is?
This blog will give you some insight.
As lawmaking and regulatory authorities try to keep up with this new form of investment, the prices of cryptocurrencies fluctuate. Governments continue to question the validity of cryptocurrencies, arguing whether or not they should be acknowledged as units of currency, applied strict regulatory laws to, or made illegal. Decisions like these have a huge impact on the prices of existing cryptocurrencies. Which may rise or fall at any given time.
Think back to April 2017, when Japan made Bitcoin legal. The price of the cryptocurrency surged up to $1,130, exceeding all expectations. On the other hand, when the Chinese government banned the use of cryptocurrencies and issued a crackdown, there was a significant drop in prices of Bitcoin and Ethereum. This goes on to show that the government’s decision regarding cryptocurrencies, be it in their favor or against it, has a huge role to play in their prices.
In today’s world, the media influences pretty much every decision you make, be it regarding a financial investment or using a particular product. So much so that the media outlets and the news they broadcast or publish directly affect the prices of cryptocurrencies as well.
This especially tends to happen every time news breaks about a finance firm collaborating with a startup blockchain company. When this happens, the firm’s cryptocurrency price rises. Similarly, if the media reports some negative news related to the firm, the company’s prices fall. By subtly manipulating the public, the media is very influential in affecting cryptocurrency prices. Instilling panic or euphoria both has its own consequences, and the cryptocurrency world is significantly impacted by it.
Fear of the Unknown
Ever heard the terms FOMO (fear of missing out) and FUD (fear, uncertainty, and doubt)? These are relevant to cryptocurrencies as well!
The former refers to market leaders controlling the market by encouraging the public to invest in cryptocurrency lest they miss out on the great opportunity. In contrast, FUD refers to the climate of uncertainty and fear regarding the digital currency market that prevents people from investing and purchasing cryptocurrency. Both affect the prices of cryptocurrency, causing them to rise or fall depending on what the current climate looks like.