Wednesday, August 10, 2022

What Makes Crypto Go Up And Down

Factors That Could Impact Bitcoins Price

What Makes the Price of Cryptocurrency Go Up?

Bitcoin is a unique asset that is relatively new, so the future is generally considered uncertain. While its about a decade old, its still a Wild West type of frontier in many ways, with future regulations uncertain. While its possible the value of bitcoin could surpass $100,000, it could also drop to zero.

The biggest single factor that could impact bitcoins price is likely government action. Regulatory agencies in the U.S. could implement new laws or regulations that severely limit bitcoin or even make it illegal.

When it comes to cryptocurrency regulation, The Federal Trade Commission, The Commodity Futures Trading Association, and the Securities and Exchange Commission are the major government regulators to watch. Because cryptocurrency is not yet regulated, it does not have the same legal or privacy protections as accounts and securities based on the U.S. dollar.

Outside influences can drive bitcoin prices up also. Tesla CEO Elon Musks Tweets, for example, have had an impact on crypto market prices. Catherine Wood, CEO of Ark Invest, is another major Bitcoin advocate who may help lead the market upward. In addition, early investors who built up a significant bitcoin holding, sometimes known as bitcoin whales, can swing the markets by entering a large transaction.

Media Coverage / Hype

The same way media FUD can generate panic and selling pressure, media hype can generate increased buying pressure.

This was evident in 2017s great Bitcoin rally when the price neared $20,000. Every other day Bitcoin was covered in the news, generating increased adoption, interest and mainly speculation from the masses.

The saying buy the rumor, sell the news implies that whenever the media coverage kicks in, its time to be wary about the price since a correction may soon come. So while initially, media coverage drives up the price, it can also cause it to crash if it rallies too fast.

What Makes Crypto Go Up And Down

The main reason for the fall in the cryptocurrency market is the famous traders adage trees dont grow to the sky. Any trend cannot last forever: the euphoria of growth is always replaced by the depression of the fall.

The term hype means excitement, intrusive advertising, hype, information hysteria. This word should not be confused with the consonant term HYIP investments with a high level of risk.

In the wake of the growth of cryptocurrencies, millions of new investors, inexperienced in exchange speculation, have entered the market. Figures and profit percentages began to overshadow the mind: people who yesterday did not know anything about the financial markets, carried their money to this new and poorly regulated market. A very high price had to be paid for this.

Examples of a fall in the cryptocurrency market show the importance of the psychological preparation of the investor and the presence of an investment plan. The latter is even more important than psychology. If you believe in the cryptocurrency market and expect its further growth, then even a drop of almost three times is not a reason for disappointment. A fall in the asset market is a great opportunity to enter the market at a cheap price. It is important for an investor to make such an entry on an ongoing basis.

Read Also: What Crypto Should I Buy

How Do Cryptocurrency Prices Compare To Fiat Currencies

Neither is backed by a commodity like gold or anything with an underlying value.

The biggest difference between cryptocurrency values and fiat money is that fiat currencies are backed by central governments and declared as legal tender. Its value is basically derived from the fact that the central government has stated that it has value and two parties in a transaction put their trust in that value.

Most countries today operate in a fiat currency system, where central banks and monetary reserves control the supply of money and, as such, indirectly control inflation.

Cryptocurrencies, on the other hand, are not controlled by a central government or authority, and most regions do not accept them as legal tender. Cryptocurrencies will also generally have a fixed supply and, therefore, the devaluation of cryptocurrencies through inflation is mostly nonexistent.

Other than that, both fiat and cryptocurrency values are supported by similar characteristics. Both methods can be used as a medium of exchange to buy products and services, and both methods have a relative store of value.

& nbsp

Remember That Bitcoin And Other Cryptos Are Volatile

What Makes Crypto Go Up And Down

For those who have been investing in cryptocurrencies for years, dramatic gains and losses are nothing new. For example, bitcoin recorded a previous record high of nearly $20,000 in December 2017, but by December 2018 was trading below $3,500.

As bitcoin gains adoption, “the up moves and down moves can be breathtaking. Taking the long-term view puts these moves in perspective, says Greg King, founder and CEO of Osprey Funds, an investment firm specializing in digital assets.

For example, even though bitcoin was down 50% in April through May of this year, it is up 25% from those lows and still up 100% from Thanksgiving last year.

For seasoned bitcoin investors, the lower prices were welcome. Then, you would actually see the drop of value in bitcoin as an opportunity to purchase, Danial says.

Don’t Miss: What Price Is Bitcoin Trading At

Many View Cryptocurrency As A Short

Though institutional investing in cryptocurrency is growing, most investors are millennials who view crypto as a short term investment. Unlike other asset classes, people do not typically include cryptocurrency in their retirement plans.

Instead, crypto investors tend to want a quick return, meaning that they go short rather than long. When everyone is trying to get in and out, the market becomes volatile.

Related: Why Entrepreneurs Shouldn’t Panic About the Bitcoin Slump

Bitcoin Was The First

Being the pioneer in this new industry has put a lot of weight on Bitcoins shoulders over the years. However, this has also allowed the original cryptocurrency to cement itself as a sure store of value, increasing its popularity to astronomical levels.

No matter what anyone says, Bitcoin was the coin that put cryptocurrencies into the mainstream. The seemingly simple concept behind Bitcoin caught on with the general public, driving its price to the coveted $50k+ levels we are seeing today.

It paved the way for an entire industry, and today, almost anyone involved in crypto owns at least some bitcoin. Worth noting is that, to this day, Bitcoin is the only crypto whose creator has remained completely anonymous.

Read Also: How To Create Crypto Exchange

How Do I Start Investing In Cryptocurrency

If you’re considering buying crypto now, as prices have dipped, it’s worth noting that there’s no guarantee the market will recover. But the simplest way to get your feet wet with crypto investments is to use US dollars to buy a cryptocurrency using a popular exchange like Coinbase, Binance or FTX. A handful of well-known payment apps — including Venmo, PayPal and Cash App — will let you buy and sell cryptocurrency, though they generally have limited functionality and higher fees.

Whether you’re using Coinbase, Binance, Venmo or PayPal, you’ll be required to provide some sensitive personal and financial information — including an official form of identification.

Once your account is set up, it’s simple to transfer money into it from your bank. And the barrier to entry is quite low: The minimum trade amount is $2 on Coinbase and $15 on Binance.

Read more: Best Bitcoin and Crypto Wallets for 2022

Memes And Social Media

What Makes Crypto Prices Go Up And Down? (4 Important Factors You Should Know)

While technical matters and serious issues can contribute to what drives the Bitcoin price, more light-hearted factors can also influence what makes Bitcoin go up or down. Memes circulating on social media can sway sentiment toward crypto markets and possibly impact prices.

This could create a feedback loop where positive meme sharing leads to a bump in prices, which leads to more memes, leading to prices rising more, and the cycle continues. Some of the most popular Bitcoin memes involve phrases like going to the moon and references to sports cars like Lamborghinis.

Recommended: How to Use Social Media for Investing Tips: The Smart Way

Recommended Reading: How Much Was Bitcoin In 2012

How Is Bitcoin Valued

      Bitcoin is a major digital currency or cryptocurrency. Unlike the dollar, euro, pound, yen, peso, and other government-backed currencies, cryptocurrencies are not officially supported by any central bank or government. The currency has traditionally traded in an open marketplace similar to the stock market, where buyers and sellers can exchange their local money for bitcoin or vice versa.

      While some cryptocurrency exchanges host trading platforms that have slight variations in prices, the overall market price of bitcoin is the latest price at which a transaction occurred. However, bitcoin value is much different and depends on the investorsome say that the intrinsic value of bitcoin is much higher than market value others claim bitcoin might not be worthless.

      Learn more about how bitcoins price is set, how to interpret its value, and how you can get in on the latest bitcoin action.

      Outstanding Issues Around The Cryptocurrency Market

      With cryptocurrencies still in the early innings, there are many issues surrounding its development. Its interesting to contemplate the philosophical and political implications of cryptocurrencies. Cryptocurrencies are inherently political because they challenge the traditional social contract that societies operate under. According to this theory, members of society implicitly agree to cede some of their freedoms to the government in exchange for order, stability, and the protection of their other rights. By creating a decentralized form of wealth, cryptocurrencies are governed by code alone.

      Its no wonder, then, that the accounting treatment, regulation, and privacy issues surrounding cryptocurrencies and blockchain have yet to be fully determined. The following section will discuss these tangible aspects of cryptocurrency development.

      Recommended Reading: Where To Buy Blockchain Stocks

      Inflation Of Fiat Currencies

      If the price of a fiat currency falls, then the price of Bitcoin would go up with respect to that currency. This is because you will be able to get more of that currency with your Bitcoins. This phenomenon can be seen today, since the FED, the ECB and other central banks have been printing more and more money and keeping interest rates artificially low.

      Figure 1: Sketch of the differences in the price development of a cryptocurrency and the US Dollar

      But Why Do Stock Prices Change Every Second

      What Makes Crypto Go Up And Down

      Stock prices are driven up and down in the short term by supply and demand, and the supply-demand balance is driven by . But investors don’t change their opinions every second. So why, then, do stock prices change so fast?

      The current stock price is nothing more than the price at which the last transaction took place. For many stocks, transactions are occurring every second the stock market is open.

      Investors trade an average of 90 million shares of Apple each day. Every time a block of shares is bought and sold, the stock price changes to reflect the latest transaction price. The sheer number of transactions ensures that the stock price fluctuates every second, even if there’s been no change in market sentiment.

      Don’t Miss: Where Can You Buy Crypto With Credit Card

      Heres Why Cryptocurrency Crashes On Weekends

      • Investors may trade cryptocurrency outside of the work week, allowing for after-hours price swings.
      • Fluctuations happen on weekends due to less volume, margin trading and other factors, experts say.
      • Weekend drops may have significant effects as regulators weigh long-term plans for digital currency.

      Cryptocurrency is known for volatility and some experts say crashes tend to happen on weekends.

      “This has been a phenomenon in crypto for several years,” said Stephen McKeon, associate professor of finance at the University of Oregon in Eugene, and partner at Collab+Currency, a cryptocurrency-focused investment fund.

      These weekend dips may have significant effects as regulators weigh the future of digital currency, experts say. Here’s why these crashes may be happening.

      What Makes Bitcoin Price Go Up Or Crash Down

      While bitcoins wild price movements might seem random, they are often driven by the same fundamental catalysts as in the traditional markets.

      Some analysts claim bitcoin is impervious to shocks that affect global finance its a hedge against things like inflation, they claim, and a sure bet against tides of uncertainty. Not so, says the media. There are countless news articles showing bitcoin is affected by exogenous market shocks plus other things that dont touch conventional financial products, such as international regulation and social media.

      In this piece, well give you a quick rundown of the main catalysts driving bitcoins price up and down.

      You May Like: Is Crypto Trading 24 7

      Correction Of The Crypto Market As A Change Of Seasons

      The current correction in the cryptocurrency market is not something extraordinary or exceptional. Moreover, it is necessary to see the picture of the market as a whole in order to judge the future. According to experts, a hypothetical correction and the loss of even 80% of the value by bitcoin will not be a fatal blow to the crypto market, but for a long time, it can consolidate the latter as a niche market.

      And dont forget that StealthEX is the best platform to get crypto coins. The process is private, and everyone can buy digital assets instantly without worrying about their safety. You can select more than 350 different cryptocurrencies with no need to provide many details.

      Understanding The Value Of A Cryptocurrency

      What makes BITCOIN go up and down | Thing are changing

      Cryptocurrencies usually aren’t governed or backed by any central authority. Government backing can improve faith in the value of a currency among consumers, and it provides a big spender and collector of the currency. But since cryptocurrencies are generally decentralized, they derive their value from other sources, including:

      • Supply and demand
      • Regulations

      You May Like: Which Crypto Uses Least Energy

      How Do You Track The Value Of Bitcoin

      Bitcoin’s value depends on your financial circumstances and investing goals. Bitcoin’s price is publicly available at any time through most cryptocurrency exchanges, along with cryptocurrency news and market websites. CoinMarketCap is one of the larger and better-known cryptocurrency valuation and data websites and is a trusted source of bitcoin price data. If you have an account at an exchange or brokerages like Coinbase, Robinhood, Gemini, Binance, eToro, or FTX, you can view the current price in your trading app or account online.

      How Accurate Are Cryptocurrency Price Predictions

      You cant accurately predict traditional markets, and neither can you guarantee the future prices in the cryptocurrency market.

      Price predictions usually brother on the extreme, and some leave little to desire. Apart from regulatory concerns, this is one of the several reasons we dont give financial advice on Swapzone.io.

      Some experts like John McAfee and Jimmy Cramer have made some price predictions considered outrageous in recent times.

      Some others, like GP Bullhound, have foreseen a total market collapse. Roy Sebag of GoldMoney Inc. even said bitcoin would have a worth of $0 in the future.

      The lesson from these predictions is that they should not be the only yardstick you base your expectations and investment decisions on.

      As always, look out for other telling signs like regulations, increased crypto adoption, the rise of utility tokens in solving real-world issues, and the growth of the futures market.

      You May Like: How To Buy Cryptocurrency Etf

      Bitcoin’s Perceived Value Sways

      One reason why Bitcoin may fluctuate against fiat currencies is the perceived store of value versus fiat currency. Bitcoin has properties that make it similar to gold. It is governed by a design decision by the developers of the core technology to limit its production to a fixed quantity of 21 million BTC.

      Because that differs significantly from fiat currency, which is dynamically managed by governments that want to maintain low inflation, high employment, and satisfactory growth through investment in capital resources, investors may allocate more or less of their assets into bitcoin as economies built with fiat currencies show signs of strength or weakness.

      Why Are All Cryptos Down: The Other Reason

      Why Crypto Went Down Today : Why This Privacy Crypto Is Down 5% Today ...

      For this part, were going to lean on investment trend expert, Matthew Carr. He saw all of this coming. Way back at the beginning of 2020, he predicted an explosive couple of years for Bitcoin and its brethren.

      I think Bitcoin, with a reward halving just months away, is going to be more explosive in 2020.

      As we all know now, Bitcoin did just that. And it kept up that momentum through most of 2021 as well. Aside from the occasional push in the other direction from China, of course. But even despite the downward pressure from Chinas banking, securities and foreign exchange regulators, Bitcoin managed to hit an all-time high. But that high note was a brief one. It has since retreated more than 35% in value. And most altcoins have followed suit.

      But now, the bull run, may give way to the bears. If youll excuse a little FUD, the reward halving isnt built to last. As Matthew Carr puts it:

      that bull will transform into a bear in 2022. This is another four-year cycle that weve seen play out time and time again.

      Certainly some food for thought there.

      Read Also: How To Create Your Own Cryptocurrency

      What Makes Cryptocurrency Go Up Or Down

      Cryptocurrencies are some of the most volatile yet profitable assets in todays world. Prices can go all the way up, giving investors and traders large returns on investment margins.

      But they can also go down, causing millions of users to lose billions and even trillions of dollars of funds within a few hours.

      So what influences the value of cryptocurrencies like Bitcoin? As with most markets where assets are sold, the crypto market and its prices are influenced by demand.

      More demand means a higher price, and less demand signals lesser prices. However, there are a host of other factors that can affect the value of digital currencies, and in this article, we take a closer look at the most significant ones.

      Popular news
      Related news