A common question among investors is about how cryptocurrencies are priced. Volatility is influenced by several factors, and this directly affects the price and use of these currencies.
Just like the traditional ones - dollar, euro, among others - cryptocurrencies can vary between rising or falling in prices during certain periods and suddenly.
5 factors that influence the price of cryptocurrencies that you should be aware of in order not to suffer losses from oscillations. Check out!
1. Political risk in listing
The political scenario directly affects various sectors of the economy and the national currency - and also the price of cryptocurrencies. This influence occurs because some investors usually use them to cover fluctuations in the conventional currency.
In addition, when there is a circulation of news involving economic crises, some people start to buy cryptocurrencies in order to protect their assets.
2. Demand for supply and demand
Another factor that determines the price of cryptocurrencies is the demand for supply and demand. To define the price, a line is drawn between demand from buyers and supply from sellers.
People's interest in acquiring cryptocurrencies and using them in their transactions has grown considerably. Therefore, volatility is strongly influenced by this increase in interest. So, the higher the demand, the higher the price will be, and the lower the interest, the lower the value.
3. The market
The cryptocurrency market is still decentralized and does not have much regulation, although it is not illegal. That way, anyone with an interest and capital can start trading, buying, selling and transacting with those currencies.
With this, there are many companies that use cryptocurrencies in their negotiations, which influences on three factors: fees charged, reputation and number of customers. These points affect the price, even in the same country, that is, it is possible to find different prices in the same territory.
4. The volatility of the dollar
The dollar exchange rate strongly influences the economic scenario and several currencies, including cryptocurrencies. On some sites and platforms, the dollar is taken into account to set the price that users are open to paying.
There are even tokens that represent dollars, the post below shows this novelty and how it influences the market.
5. Technical problems
Cryptocurrency systems undergo updates that seek to improve processes, security and bugs that hinder investors. Both strengths and weaknesses can influence the price.
In addition, news reports from the media about attacks or openness to hacker invasions can cause these currencies to be highly devalued, as people will be afraid to be a part of this world. However, this point requires a lot of attention, as it is not recommended to rely on false news or disregard real information and bear losses that could be avoided.
The price of cryptocurrencies is defined by a set of factors that, in many cases, also affects the volatility of other currencies and the economic situation in general. Therefore, always try to stay informed about any type of situation that may affect your transactions.
