Crypto prices are a hot topic these days, ever since the unique currency has taken the world by storm. The first cryptocurrency was created on January 3, 2009 by an anonymous computer programmer or team of programmers. This date marked the launch of the Bitcoin software to the public, and then the creators went on to release approximately 21 million Bitcoins. Going a bit further back in time, the roots of crypto can be traced to the 1980s, when it was known as cyber currency.
Nowadays, there are seemingly endless options for purchasing cryptocurrency, and it is wise to have a good guide to help in making the right decision. When considering the many options concerning the best cryptocurrency to buy today, it is important to read up on reliable advice about the cryptocurrency market.
When it comes to crypto prices, the one thing that is most stable about them is their very volatile and fluctuating nature. Crypto prices can go up and down quite dramatically within a single given day. While some lakes are calm and placid, other water bodies can have tides that rise and fall to a great degree – these are comparable to the extreme highs and lows of crypto market prices.
In any case, cryptocurrencies are still worth investing in once you know how to approach the issue. For some tips on several promising cryptocurrencies, you may read more on Five High-Potential Cryptocurrencies to Invest in to find some helpful nuggets for your investments.
Why do crypto prices fluctuate so much?
In light of the strong ups and downs of crypto prices, you may be wondering why the prices happen to fluctuate to such a significant degree. Well, there are a number of reasons that account for these changes and the volatile price history. Finding out more about the factors behind the price swings can make you better informed on what kind of crypto to purchase and how you want to manage it.
So, whether you are looking to invest in cryptocurrency, trade it, or keep observing its trends until you are able to make a sound decision, the most weighty factor behind the price swings that you need to know is supply and demand. Like other assets, goods, and commodities, the price of cryptocurrency also depends a lot on supply and demand. As modern technology has become increasingly mainstream, widespread, and very advanced, digital markets can rise and fall with much more frequency and speed since the technology-run platforms that host and connect them are also much faster and easier to use.
Since traders and investors can make quick purchasing decisions, predictions about market value have become important carrying a dynamic and living momentum that can affect crypto prices. Other factors that influence wildly swinging prices of crypto are social media, news, and other posts that can cause raised eyebrows and furrowed foreheads for many investors, which in turn result in reactions that lead to price fluctuations. If you are interested in some more academic backing, you may check out the article on The Volatility of Bitcoin and its Role as a Medium of Exchange and a Store of Value by the National Library of Medicine at PubMed Central.
Supply and demand have the greatest impact on price fluctuations
It is the basics of supply and demand that most influence the prices of most products, including cryptocurrency. The current market value of cryptocurrency is most strongly impacted by how many coins are in circulation at a given point in time and the amount that people are willing to dish out to get them.
One thing that is inherent in the design of cryptocurrency is that the total amount of coins is limited to over twenty million for the cryptocurrencies with a larger market cap. The total amount of coins depends on the specific type of cryptocurrency and how large the market cap is. So, prices will spike more and more as the supply in circulation approaches the limit.
Although there are seemingly endless predictions out there, the fact is, it is extremely complex and challenging to make an accurate prediction as to what will happen when the amount of coins comes close to the limit. When the limit is reached, it is predicted that crypto prices will stabilize, as there won’t be the same profit involved in mining the currency.
