What Factors Affect the Value of Cryptocurrency?

Cryptocurrency appeared on the market long ago, but the real boom of electronic money occurred just a few years ago. Crypto became an opportunity for passive income.

Many traders seek to make money on the difference in exchange rates. And it is becoming a real job. Knowing the actual crypto price is necessary for professional traders and those who want to invest. The actual value of the virtual coin may change. That’s why investors need to understand what factors crypto changes depend on. This article describes in detail the factors that impact the crypto price. 

The main factors of the crypto price today changes

Cryptocurrencies are usually not managed or supported by a central authority. Government support can increase consumer confidence in the currency’s value and provide an excellent funding and currency collection source. But because cryptocurrencies are typically decentralized, they also derive their value from other sources.

Political factor

Political news can only warn of short-term changes in the exchange rate of a particular coin. But sometimes, severe news significantly destabilizes the cryptocurrency sector. A lot depends on the political situation in the country. If there is a crisis or war in the world, the value of cryptocurrency will fluctuate negatively. 

External factors

External factors can include the activities of big players – investors or speculators. This answers the question of who determines the price of Bitcoin – those who buy the cryptocurrency and sell it in large packages, organizing what is called a pump or dump. In general, crypto prices can be influenced by many external factors, such as: for example, devaluation of national currencies and the state of economies.

Using cryptocurrency

Companies are genuinely interested in integrating blockchain technology into their infrastructure. For this reason, using cryptocurrencies to pay for goods/services or as fixed assets is growing. The public interest will continue to grow as cryptocurrency applications become more widespread and the price of crypto live with them.

Competition

The emergence on the market of new, faster, and more efficient technologies will affect the demand for older technologies. Currently, bitcoin is the leader, but its technology has long been recognized as imperfect. The network will eventually reach a tipping point, and the coin will give way to more modern solutions.

Hacking attacks

System hacks, stock market closures, and hacker attacks are unpredictable events. One flaw in the code can deprive thousands of cryptocurrency holders of their money and lead to a market crash. In today’s cryptocurrency market, there are many exchanges and wallets through which most cash flows. Therefore, cryptocurrency markets take security seriously. They create secure platforms that prevent data leakage. 

Private service providers characterize cryptocurrency. Accordingly, events related to these companies also have a massive impact on the live price of crypto.

One of the first examples of this is the infamous hacking of the Mt. Gox trading platform. In 2013, it processed about 70 percent of all bitcoin transactions. Hackers stole over 800,000 bitcoins from Mt. Gox and its users over four years. When this came to light in 2014, not only did the trading platform go bankrupt, but the price of bitcoin briefly plummeted by nearly a third. Rumors about Mt. Gox have already caused prices to plummet.

Blockchain is a relatively young technology that is developing rapidly. Improvements in technology may help cryptocurrencies gain broader acceptance in the future, which may convince more investors to buy them.

However, technical developments and adjustments to individual cryptocurrencies can also cause uncertainty. An example of this is the so-called forks. In a fork, a cryptocurrency is split into two parts. This is often used to launch new technologies on the blockchain.

Such forks lead to a lot of uncertainty and controversy in the community. Some investors also try to capitalize on the split by using unique tactics. This usually causes increased volatility during the fork.

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