Cryptocurrency refers to any digital currency that involves cryptographic technologies. Today, cryptocurrency is one of the fastest growing classes of trading assets, which represents great possibilities for making the profit.
Cryptocurrency is characterized by gradual growth and drop in rate, as well as abrupt changes. Like any other asset, the cryptocurrency rate is driven by various factors. The rate depends on supply and demand in the market. But there are also other factors that influence the cryptocurrency price movements.
What influences the price of cryptocurrency?
Supply and demand. First, the cryptocurrency rate depends on the balance of supply and demand – this is a market law. While cryptocurrency is popular and is in demand, it will rise in price. And vice versa, if the offer is high, and demand is low, the price will fall. The rapid change in the balance of supply and demand causes price ups and downs. Any leaps on the chart encourage traders to buy or sell.
Digital currency is subject to high volatility, which makes it a suitable tool for trading. The exchange rates are constantly fluctuating. In just one day, any digital currency may increase by 10-15% or even double in price.
Both large investors and small traders who want to make money on price fluctuations trade crypto. One of the easiest ways to start the acquaintance with cryptocurrencies is to open a trading account with a forex broker. Most brokers offer their clients trading with digital currencies. JustForex offers its clients to trade 13 cryptocurrency pairs with competitive spreads from 0, and leverage up to 1:3.
Regulation of the cryptocurrency. One of the most important factors at the moment, which can seriously affect the situation in the cryptocurrency market. Both the news about the prohibition of a particular digital currency or the industry as a whole, and the recognition of Bitcoin as a means of payment influence the rate.
Infrastructure news. Everything that makes Bitcoin closer and its use more easily affects market quotes. The emergence of crypto ATMs, collaboration with the largest payment systems, support of bitcoin payments by the largest retailers or cafes and restaurants – this kind of information has a great effect on market dynamics and price growth.
Hacker attacks. There is nothing good to expect from such news. Reports about hack are likely to drive prices down. The market responds instantly, and its intensity depends on the authority of the site that was attacked.
Listing of coins on top exchanges. Listing of cryptocurrencies, as well as delisting, inevitably causes a change in rate. Information that any new cryptocurrency will be added to the exchange heightens the interest in it. In most cases, adding a cryptocurrency to the exchange leads to an increase in the popularity, and hence the liquidity of the cryptocurrency. Listing is rather a positive event that can lead to an increase in price. Delisting is almost always a sign of a significant drop.
It can often be noted that as soon as a new coin appears on the cryptocurrency market, it attracts many investors seeking to earn on a sharp increase in its price. As a rule, this growth is brief.
News in the media. The volatility of the cryptocurrency rate is largely based on the hype that constantly keeps up the interest. A sharp drop in the rate can be influenced both by the post on a social network and an intentional utterance by a well-known personality of the cryptocurrency world. In the field of cryptocurrency, news really has a significant influence on the situation on the market.
However, the news may be fake. In such circumstances, the investor will go into a minus. To prevent this, JustForex broker recommends to use only verified news sources, as well as analyze news on several sources because you can run into unsupported statements.