Cryptocurrencies have become the new black in the world of online transactions. When Bitcoin, the first among them all, appeared on the market and got the attention of the public, it created a real boom and has become the main object of desire among people across the world.
At that time, Bitcoin was the only cryptocurrency available, which allowed it to keep its price high. Meanwhile, some other cryptocurrencies had appeared and shaken the stability of Bitcoin, which eventually resulted in the frequent price fluctuation of all cryptocurrencies.
However, there’s more than one reason the price of cryptocurrencies often goes up and down. In this article, we’ll discuss the most common causes of cryptocurrency price change. Let’s take a look!
Whether we notice it or not, the media has a lot of influence on all the things that surround us. Especially when it comes to popular trends, mass media is in charge of dictating the trends.
To understand the matter, we’ll take a simple example. While Bitcoin was the only cryptocurrency available, no one bothered to question its value. However, once other cryptocurrencies came into being, people got interested in learning more about them.
For instance, they heard about Facebook’s Libra project or read an article on an introduction to Cardano and realised there are more cryptocurrency options at their disposal that might be even better than Bitcoin. And, if the media decides to worship any of those new cryptocurrencies, they automatically become accepted by the general public.
Consequently, this affects the price of both Bitcoin and the new favoured cryptocurrency — the price of the former goes down while the latter becomes more popular and thus more valuable.
Another aspect that can influence the price of cryptocurrencies is the number of available coins that circulate the market. This number is directly affecting the law of supply and demand that influences the price of cryptocurrencies. The most popular example of this is, again, Bitcoin.
At the moment, it is believed that there’s a total of 21 million Bitcoins altogether. So far, around 18.35 million Bitcoins have been mined, meaning that there are only 2.644 million Bitcoins left. Once all of them are mined, there won’t be a way to get the coins other than buying them from the current owners.
Therefore, since the supply won’t be able to match the demand, the price of Bitcoin will most likely go up. The same goes for other cryptocurrencies no matter if they are acquired by mining or in any other way.
Coming late to the party has its perks. Whenever a new cryptocurrency gets launched, it usually brings some changes to the table. However, these changes can be either useful or negligible.
Logically, if the society can benefit from the innovation a new cryptocurrency suggests, investors will give their best to popularise it, and in that way increase its price. This will, at the same time, reduce the price of the cryptocurrency that’s currently a leader on the market.
Also, the process can go the other way around. If the latest-launched cryptocurrency doesn’t bring any changes for the better, it will soon become the old news, and it will be used as a good enough reason to increase the price of the principal cryptocurrencies.
Nowadays, many online businesses use cryptocurrencies as a payment option. You can use your coins to purchase things online or pay for various activities. Also, there are ways to exchange your crypto coins for fiat currency, which many people find useful.
If the situation remains the same in the future, cryptocurrencies will be valued since they will be used in real life, therefore will be considered a necessity. However, if at any given point in time, we decide to completely give up on cryptocurrency transactions, they won’t be needed anymore, which will highly likely result in their price drop.