There is a growing interest in cryptocurrencies. And despite the volatility of digital assets, people want to take part of this venture considering how it can triple or even quadruple your investment in just a short period of time. Take Bitcoin, for instance, starting from $1,000 during the start of 2017 only to reach an all-time high of almost $20,000 by mid-December that year.
However, things look bearish for most cryptos these past months. Bitcoin is currently struggling at $7,500. There are several factors that may have affected the current price of cryptocurrencies.
Excitement and Anticipation
One of the things that affect the value of cryptocurrencies is the hype behind it. In fact, the more it was broadcasted by media and discussed online, the more people tend to get excited and decide to invest in different digital currencies. In fact, the mere possibility of doubling your investment in a short amount of time could lead towards inflating its value.
Regulatory Changes
Regulatory changes can either bring the price up or bring it back down to earth. Considering cryptocurrencies are new, regulators are still trying to figure out how exactly to treat it. For instance, Russia doesn’t consider cryptos as cash. On the other hand, there are also other regulators who think that ICOs are a form of security.
Tougher rules could easily make the price of cryptocurrencies to drop. China, for instance, affected the amount of money at play considering how it banned crypto activity. In addition to this, you have the recent clampdown by US and Canadian regulators towards those who make use of the industry for their scams.
Adoption by Individuals and Businesses
Another possible reason for the price of cryptocurrency to fluctuate is because of its adoption. The more people and companies using the cryptocurrency for their daily transactions, the value of the digital currency also rises. In addition to this, it also matters who is exactly using the cryptocurrency. If there is a big name that is involved, then expect the price of the digital currency to jump much higher.
Technology Offered by the Network
It is also important that the technology being offered by the digital currency can accommodate the changing needs of users. For instance, Bitcoin encountered slow and expensive transactions. And over the years, it has affected how people perceived Bitcoin. In fact, it has brought about the rise of different cryptocurrencies including Litecoin and Ethereum.
Ethereum is also known for its technology considering that you can create tokens using Ethereum. It has allowed users to utilize blockchain technology in different ways.
Whales at Play
And believe it or not, you also have the whales at play. In fact, there is even a claim saying that it was the whales all along that manipulated the price of cryptocurrencies. If you will look at Bitcoin, for instance, 40{4ede17fdd9b4ce8121d01fc4b54913fe84f8215aace504cc657695cefb5329ff} of the total number of Bitcoin is concentrated in around 1,000 users.
It is important that you know the factors that could affect cryptocurrency prices. Not only will it help you decide whether to buy or sell digital currencies, it also gives you an idea what you are going to encounter.
