It is no secret that the prices of many cryptocurrencies are susceptible to extreme fluctuations and can both gain or lose substantial amounts of value within short periods of time. Crypto holders who are well-versed in trading and also merchants that accept crypto payments know that rapid swings in coin prices constitute a perfect occasion for making smart investment and divestment moves which can potentially yield good returns.
Thus, knowing how Bitcoin and altcoins perform on the market, as well as understanding which factors impact their prices, becomes a necessity for crypto enthusiasts. There is a large number of platforms which track cryptocurrencies in real time, and it is essential to utilize only the best ones to receive the most relevant information.
- Cryptocurrencies experience an impact of a plethora of factors both internal and external ones
- Internal factors involve the maximum supply of coins, mining difficulty, and hard forks, while the external ones include currencies’ popularity, their legal status, and publicity
- Making informed decisions when managing digital assets is of crucial significance and investors can rely on services such as CoinMarketCap or The Coin Perspective to achieve better results with their strategies
Factors Affecting Cryptocurrencies’ Prices
All of the causes behind the constant price movements observed on the crypto market in general fall into two separate groups, namely internal and external factors. The former represent the causes which concern currencies’ inherent characteristics and the design of their blockchains. Many view the maximum supply as one of the key drivers of crypto value. Essentially, coins that have a smaller maximum supply tend to be pricier than those with larger ones. Cryptocurrencies such as Ethereum do not even have a set maximum amount of coins which directly prevents these tokens from reaching extremely high valuations and subsequently lowers the barriers to entry for new investors.
Another internal factor influencing the price of crypto is the mining algorithm utilized on their blockchains. Networks which make it difficult for miners to compete for the rewards ultimately may cause the price of their tokens to increase since the complexity of receiving coins will translate into lower supply and higher demand. Finally, hard forks are also a powerful internal factor that can significantly undermine the stability of prices of cryptocurrencies. A hard fork constitutes a revision of the blockchain rules, that eventually changes the protocol according to which new blocks are generated and results in the creation of a new currency. Naturally, such situations lead to pretty impressive volatility, which constitutes a great opportunity for investors to capitalize on.
The first and perhaps the main external factor that has a direct impact on the price of cryptocurrencies is their popularity and the scale of adoption. Coins which had an early launch usually have an advantage here since they were first to utilize the innovative technology of blockchain and therefore had more time to gain users. Bitcoin remains the most successful cryptocurrency to this day, and its high price is, to a considerable extent, the consequence of it being an extensively-used medium of exchange.
Nevertheless, new currencies also have a good chance of quickly becoming popular if they introduce new technological solutions. For instance, Monero, a cryptocurrency that specializes in ensuring complete anonymity of transactions on its blockchain, has accrued a large fanbase due to its unique customer value proposition, which in turn contributed to the rise of its price.
Media coverage cannot be underestimated in its role as a driving force of the crypto market. Whenever large media outlets start publishing articles on certain coins and tokens, there is a good chance that the respective currencies will spike in their valuation.
The explanation of this phenomenon is open for speculations, but it is possible to assume that many people consider newspapers a source of relevant financial advice and decide to invest their funds into new projects based on what they read there. The more often media release stories on Bitcoin reaching a new all-time high, the more people start looking into the crypto industry and choose to have a stake in it, thus, driving prices even further.
The last external factor which often escapes the attention of analysts is the issue concerning the recognition of digital assets as viable mediums of exchange by jurisdictions. Today, many enterprises avoid venturing into the crypto world and accepting cryptocurrencies as payment due to the lack of regulations in this sphere. Business owners often simply do not know how to pay taxes on their crypto earnings.
Yet, when a country recognizes a new coin as a legal means of transferring value, the price of this crypto may experience a hike. Similarly, when certain governments announce that they plan on banning the use of cryptocurrencies, the market may demonstrate a slight downturn.
Services for Tracking Crypto Prices
The Coin Perspective
The Coin Perspective is a powerful tool for analyzing cryptocurrencies’ potential. The main feature of the website is the ability to see the potential price of a coin or a token at different market capitalization levels. For example, everyone’s favorite meme-currency Dogecoin will reach the coveted price of one dollar when its market capitalization hits $130 billion. The platform also allows users to compare the market cap of each coin to those of others. The Coin Perspective is an invaluable service for every long-term crypto investor who wants to devise a clear strategy for maximizing their profits.
CoinMarketCap.com is a renowned platform that has earned the status of a legend in the crypto community. This website has virtually all information on cryptocurrencies needed for an in-depth understanding of the market. It provides an insight into the recent and long-term price developments of coins. It shows the circulating supply, the traded volume, as well as advanced analytics, which can help investors make better strategic decisions when managing their crypto assets. All kinds of data ranging from the holders’ composition by time held to the fundamental crypto asset score are available to everyone for free at CoinMarketCap.com.
Bitgur.com is another system for monitoring prices of various cryptocurrencies in real time, which never fails to deliver exceptional quality. It features all of the updated prices for coins on different exchanges, including Kraken and Coinbase Pro. The platform provides analytics and information describing every aspect of cryptocurrencies. Bitgur is so advanced that it has a price prediction tool which can serve as a potentially useful measurement for investors to compare their personal forecast to. Additionally, Bitgur has a volatility index for each coin so that everyone can assess the risk of entering the market at any moment.
Cryptocurrencies present a chance for investors to accrue great returns, yet when trading digital assets, people must rely on relevant data. Cryptocurrencies’ prices experience the impact of numerous factors which can be hard to trace. Thus, instead of engaging in their own analysis, enthusiasts can make informed trading decisions by using data of services that feature in-depth crypto analytics.