What Does Cryptocurrency Price Depend On?

What Does Cryptocurrency Price Depend On?
Photo by André François McKenzie on Unsplash

Crypto trading has gained popularity among people. Now there is probably no person who would not know what Bitcoin is. Crypto trading is a way to make money from the difference in asset rates. Since the price of digital assets is highly volatile, it opens many earning opportunities for crypto holders. Still, there are also many risks and pitfalls. It is not enough to just buy cryptocurrency – you should also learn how to trade it, when is the best time to sell it, and to forecast its rate. Thus, it would help if you understood the factors that affect cryptocurrency prices.

Factors That Determine The Cryptocurrency Price 

The rates of digital assets depend on usual supply and demand. The price moves up when the demand for the asset increases. When there is a lack of digital assets, the demand increases, and so does the price. So when demand is more than supply, it gives the ground for price growth. Everything is the same as in the ordinary world where people buy goods and services. 

To maintain the demand on a needed level, crypto projects limit their supply. For example, well-known Bitcoin has a limited supply that is fixed and does not change, 21 million Bitcoins. 

Some crypto projects have no limitation on coin emission, but they have a mechanism of burning tokens regularly. It helps to prevent excessive supply growth and, thus, inflation. So time after time, some tokens are burned with that goal. These measures allow to keep the asset price at the needed level and not let it drop rapidly.

Here are other factors affecting cryptocurrency price:

  • News background 
  • Macroeconomics situation in the world
  • Significant events in the crypto industry (both positive and negative).

Digital assets rates may change several times a day amid some events and changes in the market and the world. To track cryptocurrency prices live, you can visit credible crypto exchanges such as WhiteBIT, Binance, etc., and see how the rates move in different time frames.