In the Cryptocurrency market, many investors and speculators have mixed and sometimes conflicting feelings. Between optimism, pessimism, fear, tranquility, reserve and adventure, and between this rise and fall, the methods of trading in this market differ. And here I will present to you . The main factors that affect the use of cryptocurrencies .
There are two types of people who work with digital currencies, there are those who follow their intuition without scientific or cognitive planning to make a decision to buy or sell digital currency, and there is the second type that studies and analyzes various indicators in the world of digital analysis to read the currency and study it seriously.
Key factors related to the impact on cryptocurrencies
There are several main factors that make the price of cryptocurrencies go up or down. The following report reviews the most important of these factors:
How does supply and demand affect cryptocurrency
It is a basic economic principle. If the cryptocurrency contains a large number of tokens with little demand from traders and users, the value of the cryptocurrency will decrease. Conversely, if the supply of a particular currency is limited and the demand is high, the value of the cryptocurrency will increase.
This is linked to the price-determining element of scarcity and is one of the factors that has pushed the price of Bitcoin to record levels. coinbase Bitcoin . supply stops at 21 million BTC - relatively low compared to other tokens - as demand has increased in recent years.
Is Cryptocurrency based on speculation?
Speculation is one of the main factors that can affect the prices of virtual currencies. Speculation can take the price of an asset to very high levels, and it can also take it to very low levels.
Fast and sharp fluctuations are among the things that characterize cryptocurrencies and whet the appetite of traders, because they create opportunities to make money through buying and selling in the short term, but of course they come with higher risks.
Investors aspire to make fortunes by trading cryptocurrencies, but they are actually buying and selling very quickly and this causes short-term volatility for them.
Organization
The perception of these currencies varies - from country to country - from recognizing these virtual assets, banning or warning against their use, without banning or considering them illegal, or strictly regulated, and new decisions are being made all the time.
In the age of globalization, decisions made in one country can affect the whole world. Cryptocurrency prices tend to respond quickly to any decision to legalize or ban, for example, when Japan declared Bitcoin a legal tool for trading, its price rose sharply in just twenty-four hours. . .
Previously, Japan represented only 1% of Bitcoin trading volume, and after its decision to legalize cryptocurrency trading, it reached 6%, which is a great effort. And let's not forget that Japan also reached 55% of global trading volume in a matter of days. In an inverted example. When China previously imposed strict measures on cryptocurrency, it caused a huge crisis, especially since China produces about 60% of bitcoin.
But then he relaxed these measures and allowed miners to operate under less stringent measures, which greatly helped increase confidence in cryptocurrencies.
media coverage cryptocurrency
Positive media coverage is one of the main factors that determine cryptocurrency prices. Positive media coverage creates a sense of familiarity.
If there is a currency that is negatively advertised, you will usually see that the price of that currency will go down. Whereas if the currency itself receives a lot of support and good media coverage, the price will definitely go up. This means that prices are influenced by human emotions and media forms.
This was especially evident in the early days of Bitcoin, when the media began reporting in detail about the new currency.
How political unrest affects cryptocurrency?
Events and developments around the world that do not appear to be related to digital currencies can affect prices, and these assets are generally seen as an alternative to traditional government-backed currencies, so when investors lose faith in their fiat for economic or political reasons. . Terms. developments, it can turn into "Bitcoin". Or their counterparts, resulting in higher prices.
Experts in the field believe that cryptocurrencies can replace gold as a safe haven when the going gets tough, and while global gold experts believe these assets are volatile, this is not the case. , analysts should increase it over time. Difficult. become complicated. to increase. global political turmoil.
Cryptocurrencies are benefiting from eroding confidence in fiat currencies, as part of quantitative easing policies under which major central banks print fiat currencies with little or no hedge of gold or commercial property.
Summary
As in the traditional markets, there is no guarantee of future price predictions for the cryptocurrency market.
It is quite clear that the prediction of the price of cryptocurrency should be taken with some skepticism, but there are still factors to consider that will definitely affect the future price of Bitcoin and cryptocurrencies in general. With the rapid development of Blockchain technology and the cryptocurrency world, for those who are taking their first steps in the cryptocurrency space, the first step is to follow the big names of people in the cryptocurrency world.
It is not only about seeing the latest developments in the world of cryptocurrency, what is changing and where things are going, it is also about looking at technical indicators in the world of technical analysis.
Bitcoin can also be a long-term investment, the provision of which is not subject to a special regime, as well as many advantages that go beyond the advantages of some national currencies, due to its connection with a world currency. And it is not only laws and regulations that determine the size of supply and demand by central banks, in addition to the ease of transferring from one country to another, and do not take their transactions into account. It includes administrative fees and transfer fees charged. by central banks. banks. banks. In the foreign exchange markets and financial trading.
Since this is a relatively new market and without an algorithm to predict the future course of this coin, it all comes down to a buyer's warning. Our only advice in this regard, do not invest more than you can afford to lose.
Read also: The best digital currencies to profit from the Internet in 2021 and 2022
Read also: Top 5 Cryptocurrency Trades You Can Have
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