Searching for a way to capitalize, many people now turn to cryptocurrencies. It is one of the most profitable investment options because it allows multiplying the initial sum in the shortest possible period. However, things may sound more challenging than they are. The cryptocurrency market is incredibly unstable and live cryptocurrency prices change daily and sharply. Let’s see what factors drive cryptocurrency price.
What Affects Crypto Price?
Here are the main reasons why crypto rates are unstable:
- The supply of digital assets is not on the government’s part. It is not central banks that issue digital coins. Neither government nor banks can increase or cut the supply of crypto coins.
- Demand and supply relationships are crucial factors in price building. If an asset is attractive to investors, they buy it actively, so demand grows, and if people hold coins, supply decreases. It causes price growth.
- Technology and application. If an asset has many use cases and valuable technology at the core, it is more likely to be in demand. If it is just a meme coin, its growth is caused by hype only. Such assets do not keep their value at a high level for long. Usually, hype calms down, and price drops.
- Competition. This factor is also connected with previous ones. The crypto market hosts hundreds of digital assets, and those with valuable technology and use cases win the competition.
- Trends. There are beard bull tendencies in the market, and you can’t help with price drops when the whole market moves down. It is impossible to control this process, but possible to foresee it if you have enough skills and knowledge to analyze it.
As you can see, cryptocurrency price largely depends on the relationship between demand and supply, and many other factors affect these relations. You may always find crypto prices live rates on the WhiteBIT platform.