A Deep Dive Into Crypto Price Fluctuations
It is crucial to keep track of the fluctuating prices of digital assets to thrive in the crypto market. If you are willing to venture into crypto day-trading, learning how crypto price changes would be significant for the profit you drive home at the end of the day. This is the core of any cryptocurrency exchange.
Understanding the factors that lead to price fluctuations will help you inappropriately predict and strategize your activities.
With Zebpay, we help you make the most of crypto price fluctuations by ensuring that you keep track of the real-time changes in the crypto market.
Crypto price changes in any market solely depend on independent market forces working on digital assets.
Here then are some of the most important factors that we feel lead to crypto price fluctuations:
- Demand and supply
Crypto demand and supply play a significant role in the fluctuations of crypto prices. The price of a specific crypto increases when its demand exceeds its supply. On the other hand, its price falls when supply is more than demand.
In crypto, traders in the market are well aware of the supply. Some currencies like Bitcoin also have a fixed maximum supply limit. Other cryptos like Ether do not have any limit to their supply, thereby making the market more volatile. Moreover, the monetary policy for every crypto asset is unique. For example, the supply of Bitcoin increases by a specific amount whenever a blockchain mines a new block. The demand for a crypto asset increases when there is a consequent increase in awareness about that asset.
- Production cost
Crypto assets are created through a process called mining. It uses a computer for verifying upcoming blocks on the blockchain. The decentralised network of crypto miners allows the digital assets to function the way they do. Moreover, the protocol creates a reward in the form of crypto tokens along with the fees to be paid to the crypto miners by the exchanging parties.
An increase in the cost of mining leads to an increase in the price of the concerned cryptos. Miners never continue with the production if the value of a currency cannot offset their costs.
- Crypto exchanges
Another crucial factor that leads to crypto price fluctuations is crypto exchanges. Mainstream, high-end cryptos – like Ethereum and Bitcoin – can be traded on various exchanges. It is common for any cryptocurrency exchange to list the top cryptos for users.
However, the smaller cryptos may only be available on a few crypto exchanges. It limits the access of investors and traders to these currencies. Certain wallet providers gather quotes for swapping specific cryptos across a range of different exchanges. However, they charge a fee for the same, which increases the total investment cost.
In short, listing crypto on more crypto exchanges increases the number of investors willing to buy it. This, in turn, increases its price.
- Competition in the market
Owing to the high demand for cryptos in the market, the number of digital assets has increased significantly over time. There are thousands of cryptos in the market, with many more on their way. While there is hardly any barrier for new cryptos to enter the market, creating an efficient digital asset requires building a good network of users.
A useful application developed on a blockchain is capable of building a network without any unnecessary delays, especially if it improves upon the drawbacks of the competing applications. If a new competitor in the crypto market can gain momentum, it derives its value from its competitors, thereby reducing its prices in the market.
- Crypto regulations
There has been a debate about the authorities responsible for regulating cryptos within a country. If crypto regulations spread awareness about the existing digital assets and provide assurance to users, the price of cryptos would increase. On the other hand, if regulations limit the freedom and flexibility of buying, selling, and trading cryptos then it leads to a fall in demand and there is a subsequent drop in the price of digital assets in the crypto market.
These were some of the most crucial factors responsible for fluctuations in crypto prices. Once you enter the market and are ready for trading, always keep track of these fluctuations and the different factors that affect them. Trading in crypto calls for a lot of precision, attention, and strategizing to avail the desired results.
Stay tuned to Crypto Price Fluctuations With Zebpay. The crypto market is quite volatile. With Zebpay, we help you keep track of these fluctuations so that you can make calculated decisions regarding your valuable investments. We made the trading process simpler and more efficient, thus ensuring that you are not afraid of the ever-changing figures on the crypto charts.