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Factors influencing cryptocurrency prices

Published on June 17, 2022

Cryptocurrency is seeing many price variations over the past few years. This currency allowed people to make millions in the year 2021 because of crowds being more interested in this new mode of investment. But the year 2022 seemed to destabilize the value of many crypto coins.

Cryptocurrency is a volatile currency but experts seem to see a bright future in it, expecting it to become a stable form of exchange a few years down the road. Many blockchain companies are issuing new crypto coins every day. This is keeping the crypto market up and running. 

Monetary Value of Cryptocurrency 

Cryptocurrency being unpredictable in value is directly affected by the involvement of the masses in it. As much interest as a community takes in a crypto coin or the whole idea of cryptocurrency in general, determines how valuable It will get day by day. Block-chain firms issue crypto coins which can also be relevant in defining the value of a coin. If a certain Block chain firm has marketing efficiency then the price of their coin relatively increases. 

Despite being unstable correct marketing strategies can increase the monetary value and commercial value of a certain crypto coin. 

Factors influencing the price of cryptocurrency 

Cryptocurrency prices are affected in the crypto market as well as exchanges by the components mentioned below 

Crypto Node count

Node counts can be explained as nodes or rows in a blockchain each representing an active wallet. Cryptocurrency node count determines the total number of active wallets existing in the same network. Bitcoin has the most nodes/ active wallets in its network. There are an estimated 12,310 public bit nodes in the running and several other private nodes protected by system security. 

A high count of nodes explains how strong a cryptocurrency is because a high amount of people are trading and buying more from that currency directly raising its price in the open market. It can withstand a calamity because a hefty group of people is supporting that currency. This makes that crypto coin strong in comparison to other crypto coins, directly getting onward with the price. 

Supply and demand 

This is one of the basic principles which varies the price of a cryptocurrency. A high number of active wallets in a crypto coin means more people want to invest and trade in it, thus raising its demand, and increasing the price of that crypto coin. You can buy and trade in cryptocurrencies by using reliable and service-friendly apps like Bitcoin motion

Because a certain currency is high in demand, more block-chain companies will produce coins to manage it. 

Cryptomining

Cryptomining costs surprisingly much. Crypto miners use specialized servers to make new crypto coins every day. High costing hardware is used to manufacture these coins and demands a lot of electric power to run this hardware. So If crypto mining cost increases, then the cryptocurrency value will also increase. Cryptomining keeps the provision of coins in the market afloat. 

Scarcity 

The scarcity of a coin or a specific currency will make it more valuable, making it collectible. In turn, raising the price of that crypto coin or cryptocurrency. It will be rarely available in the market, so investors will be interested to get a hold of it, making it go up in value. 

Government interference and control

Some governments do not indulge in cryptocurrency existing as a diffused network. So they try to control it by putting taxes on transactions and exchanges. While the others, being in opposition to such an apparently volatile network existing try to ban cryptocurrency which decreases the prices of cryptocurrency in that area. 

Exchanges of Cryptocurrencies

Cryptocurrency exchanges influence the prices of crypto coins. If a huge amount of crypto coins are present on many crypto exchanges for trades, then It increases the number of people buying and selling that coin. 

It also comes into play when you need to move a currency through more than one crypto exchange because It charges a lot of fees which will in turn increase the price of the initial asset. 

Social media hype

Social media plays a vital role in increasing the price of a cryptocurrency. The more hype and marketing a social media user or company creates for a crypto coin generates more followers and in turn more investors. This directly raises the price of that currency because of being high in demand. 

Conclusion:

Cryptocurrency is slowly making its place in the real-time stock market. There are so many factors that affect the prices of cryptocurrencies, so financial advisors always suggest you only invest a specific amount of your total assets in this unpredictable mode of trading. So that, Even If the value crashes, you will stay afloat with the help of your remaining investments. Always do your research and then invest in cryptocurrency. As experts say, this is the new future of investment and technology. 


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