Cryptocurrency prices can change a lot because of many factors. Understanding these factors is important for both investors and traders. While many aspects shape crypto trends, only a few people understand how much each factor contributes to the price changes.
Here are nine key drivers that affect crypto prices the most:
1. Bitcoin’s condition
Bitcoin (BTC) is the first and most popular coin, so it often sets the mood for the whole market. Since BTC helped people trust crypto, its price going up shows the market is stable. For example, when Bitcoin went over $20,000 in 2020, other coins rose too. However, if Bitcoin’s price drops, it can make people panic and sell.
Today, there’s more and more adoption of BTC every day, such as shopping and crypto casino sites. With more use in daily trade, people are more likely to keep their BTC, keeping its price stable.
2. Government rules and updates
Laws decide the future and place of crypto in various countries. Governments are paying more attention to coins now which can cause prices to go up or down. For example, when China banned crypto mining and trading in 2021, prices went down. On the other hand, laws that support crypto can make prices rise.
3. Wealthy investors
Wealthy investors, known as ‘whales’, can change crypto prices. If a whale buys a lot of BTC, it can make Bitcoin seem rare and push prices up. If a whale sells a lot, it can flood the market and cause prices to drop. Watching what whales do with blockchain tools can help predict price changes.
4. Big betting on crypto
When many traders bet on crypto prices going up or down, it can cause sudden crashes or jumps. This happens often in futures trading, where big bets can make prices move fast.
For example, in May 2021, prices dropped quickly when many traders had to sell because they lost money. Watching how traders feel and how much they are trading can help you see these changes coming.
5. New listings on big exchanges
Like stocks, being listed on big exchanges shows that people trust a coin. On big exchanges, the coin gets more attention and demand. For example, when Coinbase listed Dogecoin (DOGE), its price went up because more people wanted to buy it. However, when a coin is removed from an exchange, it can mean risky legal problems.
6. How easy it is to buy and sell
How easy it is to buy and sell a coin affects its demand. If a coin is easy to trade, more people will buy it. Easy-to-use platforms and payment options help with this. For example, decentralised exchanges (DEXs) make it easy to trade crypto without third parties. This leads to more trading activity.
7. Big tech companies
Big tech companies can change crypto prices. When they invest in or use blockchain, it can make prices go up. For example, when Tesla bought BTC, Bitcoin’s price went up. It’s because a tech company adding crypto to their payment systems leads more people to use it. However, bad news about tech companies can make people worry, which lowers the prices.
8. New stablecoins created
Stablecoins are cryptocurrencies linked to fiat currency, helping keep their value steady. New stablecoins can help the crypto market by making it more stable and easier to trade. For example, when TerraUSD (UST) was launched, it helped other coins stay steady and increased trading.
9. Hype and social factors
Hype and social factors can affect crypto prices a lot, sometimes causing the market to act in strange ways. These factors are usually beyond the usual statistics and formulas that experts use. Instead, they simply depend on how the public behaves, which can be harder to predict.
Here are some examples of how this happens:
- Fear and greed: The Fear and Greed Index shows how the market feels. When fear is high, prices usually drop. When greed is high, prices tend to rise. Be careful when greed is high. It could mean a price drop is coming soon.
- Social media: Tweets or posts from big names like Elon Musk can quickly change prices. For example, Musk’s tweets about DOGE caused its price to go up fast. This shows how strong social media can be in moving the market.
- Meme coins: Meme coins are coins that started as jokes on the internet. Coins like DOGE and Shiba Inu (SHIB) show how excitement from communities can make prices jump. These coins often become popular through social media and online groups, leading people to trade them for quick gains.
- NFT and metaverse: Non-fungible tokens (NFTs) are special digital items kept on a blockchain. They show that someone owns something unique, like art or music. NFTs have become popular, giving people new ways to invest in crypto. When NFTs get a lot of attention, their prices often go up.
- Hacks and scandals: Hacks and scandals can hurt crypto prices. For example, in 2016, a hack of the DAO caused Ethereum’s price to drop. Scandals with exchanges or projects can also cause panic selling, making prices fall quickly.
The next big price might be coming: Will you be ready?
As the crypto market keeps changing, it’s important to stay updated. Prices can change a lot and being ready can help you make better decisions. Watching trends, news, and social media can help you plan ahead.
Whether you’re experienced or new, knowing these things will help you understand the crypto world better. Using crypto for more transactions, like betting using coins at a crypto casino, can also make crypto’s value stronger.
