Explained: Pricing Of Cryptocurrency
Updated: Jan 4
Most of the people who are new to the world of cryptocurrency, usually don't understand the pricing of cryptocurrency which usually results in a lot of bad crypto investments. We all know that cryptocurrency pricing can be very volatile, especially from the past events of December 2017.
The normal currencies are regulated by institutions like banks or state organization and the pricing of normal currencies is driven by various factors like the economic situation of the country, world politics, GDP of the country, export/imports, etc. On the other hand, cryptocurrencies do not have a regulatory body in the form of bank or state organization, so they are prone to high volatility. The value of cryptocurrency is primarily determined by the level of supply and demand at a particular time.
Factors Affecting Cryptocurrency Prices
Some of the factors that affect the prices of cryptocurrency are :
Market News: From time to time, we observed that there may be informational stuffing on the network, with the goal of enticing traders to sell or buy cryptocurrency. Usually, after the decline of the crypto market, big traders and investors buy crypto into their portfolios.
Big Traders Or Investors Tactics: It's quite simple for big traders or investors holding large crypto to manipulate or destabilize the cryptocurrency rates.
Strong Technical Analysis: People who are really serious about crypto usually invest a lot of time in carrying out a full technical analysis like predicting global trends, price corridors, resistance, etc.
The prediction of long-term prices of cryptocurrency is majorly dependent on fundamental analysis and should always be studied through during the stage of technical analysis of the market.
How Is The Exchange Rate Formed?
In a crypto exchange gradual increasing and decreasing of cryptocurrency price depicts a regular flow of trading.
There can be a sharp increase or decrease in price whenever a whale enters the trade. In terms of crypto, a whale is an exchange investor who has a decently huge amount of assets and has the capability of raising the price of the cryptocurrency as soon as possible. Thus, a whale investor deliberately pumps up the price of crypto and makes money out of it. On the other hand, new traders usually panic easily and cannot differentiate between dump and correction. A simple rule is if there are lots of orders on exchanges, and the correction is not observed, there will be a high chance of depreciation.
Correction is usually a small change in the value of crypto in a direction opposite to the current trend but in crypto market correction can almost half the value of the asset also.
Can We Predict The Price Of Cryptocurrency?
If you are someone who wants to be an experienced and decently good crypto investor, you will have to devote enough time to researching this topic. It's not really necessary to have big investments in crypto.
You will have to keep a close tab of news, current trends, forecasting by various experts. Always be sure to take time in learning the basics of fundamental and technical analysis and then use them before selling or buying the cryptocurrency. It is vital to learn how to make risky decisions and open deals in time.
It is complicated to identify the fall or rise of the cryptocurrency but if you carefully keep track of the events on the exchange and analyze it, you will be able to avoid losses on your investment.
Here we just discussed some of the things about the pricing of cryptocurrency, but this doesn't mean that this is it. There are always new things to be learned and the best way to learn them is by doing yourself.
We hope that this post has provided you with some interesting and useful information about the world of cryptocurrency and pricing around it.
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