What Determines the Price of Cryptocurrency in Australia?

The cat must be very unlucky if its curiosity kills it. Curiosity is the constant cognitive state of cryptocurrency enthusiasts all over the globe. The itch to explore new things about cryptocurrency never goes away.

As a cryptocurrency enthusiast, your quest for knowledge should be insatiable. For instance, if you want to sell or buy Bitcoin online, this knowledge helps you get the best out of the situation. 

Cryptocurrency enthusiasts in Australia are not different. Today, we seek to answer the question: What determines the prices of cryptocurrency in Australia? 

Cryptocurrency prices are determined by a complex interplay of factors, much like any other tradable asset. They are highly volatile, hence the need to know the reasons for their price fluctuations. Some key players are discussed below:

1. Supply and Demand

An interaction between the laws of demand and supply creates the market equilibrium, where the quantity demanded equals the quantity supplied at a certain price. Other than that, prices tend to rise when demand exceeds supply and fall when supply exceeds demand.  The basic principle of demand and supply affects all tradable assets. The need (demand) for cryptocurrencies sustains its sale (supply) in the cryptocurrency market.

• Supply

Using Bitcoin as a case study, there are only 21 million Bitcoins in existence. Only a significant portion of this figure has been mined and is in circulation. If you compare these figures with that of the number of cryptocurrency enthusiasts who are interested in trading Bitcoin, you will observe that its demand exceeds its supply. 

The amount of cryptocurrency available in circulation impacts its price. When the supply of cryptocurrencies in the markets is limited, it can create scarcity and drive up the cost if demand remains high. 

On the other hand, an abundance in the supply of digital assets can put downward pressure on their prices. This causes them to lose value as they become readily available.

• Demand

Due to an increment in awareness and acceptance, the desire to own and use cryptocurrencies affects their prices. Factors like increased investment from companies, and the potential for its use in various applications can raise demand and push the price up.

In the same vein, the more popular digital currencies in Australia like Bitcoins, Ethereum, Ripple, and Litecoin are in higher demand, therefore, they have relatively higher values.

Local adoption and usage of digital assets for various applications within Australia can influence the demand and rate of exchange. Companies like Harvey Norman, Pizza Hut, Qantas, and the National Australia Bank allow clients and patrons to use cryptocurrencies for their various transactions.

1. Overall Market Sentiment

It may seem trivial but the general mood of the market can significantly influence cryptocurrency prices. For instance, a top cryptocurrency enthusiast like Naomi Brockwell can make a positive comment that will consequently increase the value of a particular cryptocurrency.

A positive market sentiment, coupled with optimism about the future of specific digital assets, can boost prices. A real-life scenario was witnessed when Elon Musk sent a positive message about Dogecoin, causing its value to rise rapidly. This effect may not be permanent but many traders are interested in the short-term influence that market sentiments have.

On the flip side, market crashes or other negative market speculations can lead to price drops.

1. Competition

More than often, newer or more promising projects can attract investors and potentially take market share from established coins. Thus, affecting their market value. The cryptocurrency market is an arena where projects are in a constant struggle to rise above others.

High competition among buyers to procure a single asset can drive up the demand for it, as well as its price. Lower competition will negatively impact its demand, as well as its price.

1. News and Events

News and events can have a major impact on the prices of digital assets, sometimes causing sudden spikes or dips. Significant events related to specific projects, technological advancements, or regulatory changes are common factors that influence cryptocurrencies.

It doesn’t matter if these events are directly related to the crypto-verse. The global recession in 2008 caused the populace to lose confidence in traditional financial institutions. People sought alternative investments in cryptocurrencies which led to an increase in cryptocurrency trading platforms.

1. Regulation

We cannot leave out the role regulatory uncertainty in Australia has to play in the price determination of cryptocurrencies. Restrictions related to trading platforms may dampen investor confidence and harm the rate of exchange.

Unclear regulations may also cause investors to hesitate. The government must do a review of the policies guiding the crypto community in Australia to help encourage investors.

1. Taxation

Establishing new tax policies, or modifying existing tax policies can lead to price changes. Cryptocurrency held in Australia is classified as an asset subject to capital gains tax. Capital gains tax is a levy you pay on profits made from selling assets that have increased in value.

1. Australian Dollar (AUD) Fluctuations

Yes, fiat currency can have an impact on digital currency. After all, investors use the AUD to purchase cryptocurrencies. Cryptocurrency prices may appear relatively cheaper when the AUD weakens, potentially increasing demand and pushing prices up.

How to Monitor Cryptocurrency Price Changes in Australia

As a cryptocurrency enthusiast in Australia, it is essential to monitor the price changes in digital currencies. To remain in the game, we recommend these legit sources to help you with live updates so that you can stay informed:

• CoinGecko
• Independent Reserve
• CoinMarketCap
• Cointelegraph Australia
• Finder
• Twitter
• Discord

Do not blindly rely on any single source. We highly suggest that you cross-check any news, or run them through multiple sites to be certain.

Wrapping Up

Cryptocurrency prices are highly volatile and can fluctuate significantly in a short period. The price changes are not dependent on any singular factor, rather they are based on the interaction between these key factors that have been discussed.

Based on the foregoing, predicting the future movement of digital currencies is complex and should not be done without seeking professional help.

Finally, it’s pertinent to understand the risks involved before investing in any cryptocurrency. We hope this provides a helpful overview of the factors determining cryptocurrency prices in Australia.

Similar Stories