In 2017, Bitcoin’s price upscaled and crossed all levels that generate the maximum interest even from the general public. The high searches of Bitcoin, cryptocurrencies, and prices of crypto’s on the internet shoot up like never before! Numerous people carry one sole interest in grabbing the massive gains just as the early investors who were experiencing the benefits of the raised price of cryptos. However, the inevitable correction later released the crypto prices fell tremendously, the late buyers immediately checked the value of their holdings getting into halves. In all chaos, crypto is built strongly with several commuters and kept growing ever since despite instability.
Unexpected dives and steep rises is the nature of cryptocurrencies, but with time the bitcoin market has been stabilised. Well, irrationality is always rooted in the bitcoin trading, so here we have curated the details that analyse the factors behind the setting of the price of cryptocurrencies.
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Demand and Supply
Currently, there are around 2,500 cryptos listed on the several online exchanges, and its apparent the number will continue to rise in the forthcoming period. Supply and demand is the biggest factor in determining the value of anything that revolves around the trading market. Even in digital currencies, it works in the same way, today the supply of cryptocurrencies is limited as compared to increasing popularity which drives the prices especially of Bitcoin (which is currently dominating in the market).
Also, the significant rise in the adoption and popularity of numerous companies indirectly pressurized many governments and countries to implement digital currencies in any way. The online exchanges dramatically showed a significant increase in the market cap in these few years. All these factors have supported the fundamental drivers for the high prices in cryptocurrencies.
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Competition
Today, Bitcoin is considered a popular cryptocurrency; there are several other competitive currencies running parallel. However, Bitcoin is undoubtedly dominant in terms of market capitalization, other coins including litecoin, ether, XRP, bitcoin cash and EOS have become the closest competition in 2020. However, the crowded land of cryptocurrencies turns out to be beneficial for the investors as the widespread competition has maintained the low prices.
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Trading Bots
It’s artificial intelligence and automation; trading bots work from behind pushing crypto’s price theoretically up by creating fake demand for the coin. So before investing, it is mandatory to do some research!
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Community Support
The role of an active and engaged community plays a vital role in becoming the assets for the cryptocurrency. When the market rises with actual members instead of using bots, the value of cryptocurrencies presents real profits to the investors. The unofficial public relations departments handle the cryptocurrencies, those who work in favour of the reputation of a project only give clarity of the market to the upcoming and existing investors.
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Regulation
Digital assets become a task to classify by the regulators due to the rapid rise in the demand and popularity of top-rating cryptocurrencies such as Bitcoin, Litecoin, etc. Presently, the Securities and Exchange Commission (SEC) considers cryptocurrencies as securities, whereas the U.S. Commodity Futures Trading Commission (CFTC) classify bitcoin to be a commodity. Nobody knows who will ultimately take over in the decision making for setting rules for cryptocurrencies; the rising uncertainty has put regulators in a dilemma.
Conclusion-
Here in this blog, we have mentioned relevant factors and detailed information involved in the fluctuations and setting of crypto prices. The market is expected to rise in coming times as Bitcoin has become the fastest-growing industry reflecting the rise in other cryptocurrencies as well. However, regulators are persistent in protecting investors, but still, cryptocurrencies will take years to make an impact globally.