Do you plan to invest in crypto currencies? In this case, you need to know what affects the prices of these currencies in order to move forward in the market and implement the right investment plans.
Volatility in the price of crypto coins such as Bitcoin and Ethereum is quite popular. Even 40 percent changes are possible within a few days. This rate can be much more in the subcoins. So, what causes these ups and downs, why are prices of crypto currencies falling or rising?
As with any type of investment, the laws are in competition for the development and use of crypto currencies. Periodically, there are various developments in various countries that target this area in legal matters. Crypto currency is recognized as a currency, should be considered as an asset, strictly regulated or completely banned, such as issues such as coming up with new news.
Regulatory decisions immediately affect prices. For example, when Japan announced that it would legalize Bitcoin in April 2017, the price of Bitcoin increased by 30 percent in one day to $ 1,130.
Negative news about regulation can likewise reduce prices at once. In particular, the negative news coming from the Chinese market, which is a large market, affects prices negatively.
In February 2018, China’s blockade of crypto-currency websites led to a 15 percent depreciation in Bitcoin and 20 percent in Ether. Previously, the ICO ban from China also had similar conflicts.
Crypto currencies are not the only investment instruments affected by regulations. Stocks are similarly affected by government decisions.
For example, stocks are often depreciated when the UK regulator Financial Conduct Authority (FCA) announces it will examine a sector. The Capital Markets Board of Turkey (CMB) is effective decisions. In the United States, the Securities and Exchange Commission (SEC) can be cited as an example, and the SEC’s steps, especially in terms of crypto currencies, concern all investors around the world.
Regulations that affect different sectors of the economy, such as tax decisions, can increase stock prices. Of course, in cr
In addition to regulation, recent developments that seem to have nothing to do with crypto currencies can also affect prices. Crypto currencies are often seen as alternatives to traditional currencies, also called fiats, whose value is supported by the states that issue them.
When investors lose confidence in a fiat currency for economic or political reasons, they may turn to Bitcoins or subcoins; this has a positive effect on prices.
Some experts also predict that interest in gold, which is considered a safe haven, may shift to crypto coins when the political and economic atmosphere in the world deteriorates.
Thomas Lee, founder of the independent research company Fundstrat Capital, says that the new generation will prefer crypto coins, but the World Gold Council says these coins are too volatile to be a safe haven. Nevertheless, we can hope that these currencies will increase in value when the global political environment is strained.
Speculative investors hope to make money from crypto currencies, they can negatively affect the market by making a quick buy and sell or may cause short-term fluctuations.
Investors talk about ”whales özellikle in particular, which are speculative trades that have a huge impact on the market and have huge amounts of a certain crypto currency.
Crypto traders who experience the Dot-com bubble will be well aware of how speculation can inflate and deflate the value of an asset in a short period of time.
Cyber attacks since the early years of Bitcoin have always been an important problem for crypto currency investors. Every major hacking case in the system, in stock exchanges or in wallets has caused significant price crashes in the market. To remind you, the recent attack on the Binance stock market led to a 10.8 percent drop in minutes.
Although crypto money technology has become more sophisticated, hackers can still do good work, so these undesirable cases are likely to continue. Unfortunately, there is always the possibility that cyber attacks will lower crypto currency prices.
5.New Crypto Currencies
In the crypto currency market, especially in the last two years, new crypto coins have been released and continue to be released. The number of crypto currencies in the market is now slightly over 2000, and each new ICO (the main method of introducing new crypto currencies) means the division of the pie. As money flows from one crypto to another, prices are negatively affected.
In order to avoid significant losses, you should not invest in new crypto coins without thoroughly researching them. The short history of the market is already overflowing with unsuccessful ICO stories. These failure stories may pave the way for the loss of value in order to keep investors away from the market.
6.Supply and demand
Factors affecting crypto currency prices include supply and demand. Supply and demand, which affect the price of any good or service, are also extremely important for the crypto currency market.
Many crypto currencies have a limited supply. Increasing demand with a low or limited supply in a given crypto currency raises the price of the corresponding crypto currency to higher levels. On the contrary, if the supply is high but demand is weak, the price is lowered.
Moreover, the emergence of new crypto currencies may change the current supply and demand balances across the market. For example, the intense demand for several crypto currencies in the market may shift to different crypto currencies in the future, which affects prices. We explained this in the next article.
To sum up, regulations, current developments, speculation, cyber attacks, the emergence of new crypto currencies and supply-demand are among the most important factors affecting crypto currency prices.