Ever since its launch in 2009, cryptocurrency is the most counted and one of the most volatile topics. The whole world is trying to know and get to the bottom of what is cryptocurrency all about.
Here in this blog, we will help the investors and all other enthusiasts know the whole flow of cryptocurrency prices moving in the market.
Before starting the blog, Let’s make a brief discussion and know some FAQ’s about the basics of cryptocurrency.
Is it safe to invest in cryptocurrency?
In short, there is no such thing as a safe investment. There are certainly some investments that are safer than others, but for the most part, any investment has an element of risk.
What is the total market cap of Cryptocurrency?
The cryptocurrency coin market cap keeps changing on the basis of the cryptocurrency price movement, which, in turn, varies on the basis of different factors.
How to predict cryptocurrency prices?
It is impossible to predict the price of the cryptocurrency. The traders can just do the analysis to know the price of the cryptocurrencies by playing with a few patterns like Head&Shoulder pattern, Rising Wedge, Falling Wedge, and graphs and many more.
What is a cryptocurrency?
A cryptocurrency is a tradable digital asset or one can say a digital form of money, built on blockchain technology, existing online.
Cryptocurrencies use cryptography to ensure a secure transaction, hence their name is cryptocurrency.
Many Blockchain enthusiasts believe that cryptocurrency is the most volatile element in the world crossing the characteristics of Francium (the most volatile element in the periodic table).
99 out of 100 investors have tried to crack the code of why cryptocurrencies are fluctuating so much. They did so to understand the flow and convert more insights making their investment more successful.
Many industries have declared It is very difficult to find why the cryptocurrency price moves in the market, let our experts give a shot. We will try to explain the reason behind the cryptocurrency price moving in the market, by understanding why and how they move.
Cryptocurrency vs Fiat Currency
The biggest comparative factor standing between cryptocurrency and fiat currency is their backing.
Fiat currencies are backed up and handled by the central government and its value is decided by the central bank. The central bank controls the entire supply of money and thus inflation occurs.
Whereas cryptocurrencies, on the other hand, have bought into the limelight and were not controlled by the central government. They can be regulated by individuals also. The most important thing about these is they have fixed supply and are completely secured.
Both cryptocurrency and fiat currency can be used as a medium of exchange services and products at any store.
Cryptocurrency price fluctuation
Being in the market for a long time cryptocurrency is still in the growing phase. The result of this uniqueness is due to the high volatility in the industry. The reason for this high volatility is the investors who always makes experiments. This allows the cryptocurrency to fluctuate its price in the market.
Let’s make it more clear by looking into the fluctuating price value of one of the most popular cryptocurrency Bitcoin this year:-
There are many other factors that affect the change in the price of the cryptocurrency.
Factors affecting the changing values of cryptocurrency:-
Lack of mechanism:-
This is the most important factor which affects the values of cryptocurrency.
Some brands use the burning mechanism to destroy a few parts of the coin supply. This increases the coin values for lesser coin supply.
Deflation of Fiat Currency:-
When there is a decline in the price of fiat currency, the price of the cryptocurrency would automatically go up in the market. This happens only because one could get more currencies with the cryptocurrency.
Cryptocurrency can only be as valuable as the market deems fit and the market values it on the basis of factors that are at the center of the project development.
Whales are those who have a large number of bitcoins with them. They make it very difficult to put any fixed price tag for the cryptocurrencies.
The whales have the power to change the price of cryptocurrencies. They start selling them at lower prices as compared to the market. This creates a panic situation for the small traders who starts selling their holdings immediately.
During the panic situation, the price of the cryptocurrencies comes to land. And just then they will start buying cryptocurrencies and buy more.
Besides all these factors and fluctuations the one thing which greatly affects the price of the cryptocurrencies is the regulations sets.
Directly, the speed at which governments are going out regulations is constrained to an immense degree, in this way keeping cryptocurrencies arriving at their mass adoption potential. In any case, the more regulations, the more noteworthy would be the adoption and consequently the ascent in cryptocurrency costs.