As most of the online traders from all over the world already know, cryptocurrency is a relatively new and innovative type of currency. It is also known under the name digital currency. As with other currencies, this type of exchange has its value thanks to the fact that people believe in this. Of course, some currencies are backed by precious metals such as gold for example. On the other hand, there are other currencies that are backed by nothing and no one. In this case, they have value because of the people who use them as exchange mean. The main idea behind the development of digital currencies was to create a space where people could store assets without being related to any centralized financial authority.
In the following article we are going to provide our readers with some more specific information regarding the price Cryptocurrency in general and what affects it. The information won’t be only limited to Bitcoin but will cover the situation as a whole. Keep reading to learn more about this topic.
Table of Contents
What Defines the Price of a Cryptocurrency?
Let us start with a short list consisting of the main factors that are responsible for the defying and changing the price of any cryptocurrency.
- The correlative structure supply/demand.
- Energy put in the form of electricity to secure the blockchain.
- Blockchain difficulty level.
- The utility of the particular currency.
- Price of Bitcoin.
- Market dilution.
It is clear that various precious assets such as metals, have their high value defined thanks to their utility and the fact that their supply is limited. In this line of thinking the economic factor supply/demand actually affects the price of many assets. For example, the limited supply of Bitcoin is very important factor that affects its price. There are only 21 million whole units of this digital currency that are available.
Now, take into consideration the fact that there are over 7 billion people on the planet. In this situation if only 1 billion of them would like to buy Bitcoin, they will define a very high price of the cryptocurrency as there is not enough supply to meet the demand.
People will just need to pay more to get the coins because they think that this currency has value.
Block reward halving’s, cause the price to slowly increase as the halving approached, due to the reduced supply of new incoming coins imminent.
This has to do with the blockchain security. The higher it is and the more difficult the mining process is, the high will be the value and the price of the given cryptocurrency. This will result in a harder mining process and will definitely affect the ending price of the asset.
This is one of the most important factors when it comes to the crypto price. The most simple example that explains this is that if you are not able to use something for anything, be it for payment, investment or something else, then it won’t have any value. When it comes to Bitcoin, this currency is highly useful for payments in an increasing scale which means that its utility is very high at the moment. This makes it also suitable to be used for investment business. Note, that the utility changes immediately affect the price volatility of any currency and asset.
Another key component to be taken into consideration. This is necessary as the public perception of a cryptocurrency is very important for its increasing or decreasing price. When it comes to Bitcoin its popularity is higher than the other digital currencies therefore its price is constantly increasing for the last 12 months. There are some currencies that quickly lose popularity and appraisal resulting in their disappearance from the public eye. Of course, there are some factors that could affect the reputation of every cryptocurrency in a negative way, however the constantly upgrading innovations related with the security of the asset manage to maintain the positive reaction of the people.
Systems That Offer Live Crypto Price Information
As some of the online investors know, currently the market offers a wide range of trading systems that provide their users with this important feature. Our research revealed that QProfit System is maybe one of the best platforms that offer this feature in its algorithm. We recommend it to every online investor as we believe that software is powerful and reliable enough to provide its clients with regular and stable results.
Remember that the price aspect of every asset is a constantly changing feature which depends on many crucial factors that should be taken into consideration. This is why people conduct in-depth analysis and tests. The most important thing for regular traders to remember is that they should only work with reliable and legit systems in order to achieve success in the field of cryptocurrency trading.