Contents
In this blog post, we’ll explore what makes crypto go up. We’ll look at some of the underlying factors that affect cryptocurrency prices and see how they can impact the value of digital assets.
Checkout this video:
The Basics of Crypto
Crypto is a digital or virtual asset designed to work as a medium of exchange. Cryptocurrencies are decentralized, which means they are not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Crypto assets are complex and involve a high level of risk. In this section, we’ll go over some of the basics of crypto.
What is cryptocurrency?
Cryptocurrency is a digital or virtual asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control.
Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Since then, numerous other cryptocurrencies have been created. These are often called altcoins, as a contraction of “bitcoin alternative.” Altcoins are characterized by their own individual blockchain technologies and purposes.
Cryptocurrencies are typically stored in digital wallets and traded on decentralized exchanges. Bitcoin and Ethereum, the two largest cryptocurrencies by market capitalization, are both primarily traded on centralized exchanges such as Coinbase and Binance.
What is blockchain?
At its simplest, a blockchain is a digital ledger of cryptocurrency transactions. It can also be used to track other data, like property ownership or votes. When a transaction happens, it is recorded on a “block” of data. That block is then added to the “chain” of all previous blocks, creating a record of every transaction that has ever happened on the blockchain. This record is public and transparent, so anyone can see it.
Blockchain is often referred to as the underlying technology of Bitcoin and other cryptocurrencies, but it has many other potential uses. For example, it could be used to create a secure, tamper-proof voting system. It could also be used to track the movement of food through the supply chain from farm to table, or the movement of diamonds from mine to market.
How Does Crypto Go Up?
When people buy crypto, it goes up. When people sell crypto, it goes down. That’s the basic explanation, but of course, there’s a lot more to it than that. The forces that drive the price of crypto are constantly changing, so it’s important to stay up-to-date on the latest news and developments in the space. In this article, we’ll explore some of the key factors that influence the price of cryptocurrency.
Supply and demand
Supply and demand is the most basic economic law and it applies to cryptocurrencies just as it does to any other good or service. When demand for a coin is high and the supply is low, the price will go up. When demand is low and the supply is high, the price will go down.
Market sentiment
Here are some dominant forces that affect market sentiment and, consequently, cryptocurrency prices:
1. Regulation: Governmental acceptance or rejection of cryptocurrency contributes to market sentiment.
2. Media coverage: Cryptocurrency prices often surge after media outlets write positive articles because it attracts new investors who buy the coins, driving up prices.
3. Innovation: When a company creates a new product or service that makes buying, selling or using cryptocurrency easier, that can have a positive effect on prices.
4. Scarcity: There are only so many Bitcoins that will ever be mined (21 million), so as demand increases, so does price. Some smaller coins have an even lower supply (for example, Ripple’s XRP token has a supply of 100 billion).
News and events
One driver of cryptocurrency prices is news and events. For example, a company announces it will start accepting Bitcoin as payment, or the South Korean government proposes new regulations on cryptocurrency trading.
When news like this hits the wires, it often causes a buying frenzy that drives up the price. These events are often called “pump and dumps.” They can also create a snowball effect, where one event leads to another and another, causing the price to skyrocket.
Just as news can drive the price up, it can also cause it to crash. A well-publicized hack of a major exchange or wallet can send prices tumbling. Or if a popular coin suddenly becomes unavailable for trading on major exchanges, that too can cause prices to drop.
Conclusion
In conclusion, we can say that what makes crypto go up is a combination of several factors. These include media coverage, technological innovation, and investor confidence. While there is no surefire way to predict what will happen in the future, paying attention to these factors can give you a better idea of which way the market is likely to move.
