Every economy, from your local farmer’s market to the crypto industry, relies on the simple principle of supply and demand for its market value. Crypto tokens are typically made in a limited quantity, and crypto prices is the result of those who want it versus those who are willing to sell.
Though apart from this simple concept, other important factors determine the value of a crypto project. Let’s look at the other reasons, shall we?
Stability and Decentralization Attracts More Investors
They say that the blockchain is a wild west, and crypto projects that have tighter security measures can command higher prices. Notice how the biggest names in the market today, like Bitcoin and Ethereum, cost more than their lesser-known counterparts? Part of the reason is their high security features, making them more reliable for users, thus, more attractive and more expensive.
Then there’s also decentralization, which refers to the degree of diversification in the ownership and influence of the blockchain. More validators or stake pools typically mean more room for new owners to come in, enticing them to buy into the project.
So, what factors influence the rise and fall of crypto prices? Here are four of them:
1. Technology
Crypto is all about innovation – constantly pushing the envelope in what the blockchain can offer developers and consumers. Advancements and changes in a crypto project’s network, when done correctly, can propel prices and secure a strong following.
Remember Ethereum’s “Merge” a few months back? Their successful transition made the coin stronger and pricier than ever.
Protip: Invest in secure crypto tokens. While innovative and new ones may be cheaper, stable tokens will give you more assurance. The ETHi token is based on rent-to-own US real estate, making it one of the more stable cryptocurrencies in the market today.
2. Real-World Events
While crypto and traditional economy are worlds apart, they are both affected by situations that happen in real life. Economic recessions, border conflicts, and other events can pull the price of a crypto token down the drain.
In the US, many crypto companies like Binance are moving elsewhere due to unstable crypto regulations. Similarly, tightening rules for crypto transactions could detract some buyers from keeping some tokens in their wallets, resulting in decreased pricing.
Protip: Check the news before making critical trades. Chances are, what’s on the headlines will affect the running crypto prices. Follow @ethical_token on Twitter for the latest crypto roundup.
3. The Hype Train
On the flip side, a lot of crypto projects are propelled by hype and popularity. Knowing how many people buy using their hearts and emotions instead of logic, plus a dash of FOMO (Fear of Missing Out), marketing teams capitalize on and blast their projects on social media.
Some of the most popular tokens, like Dogecoin, Shiba Inu, and Pepe, gained unparalleled infamy due to the names backing the projects. A celebrity talking about a token? Expect a rise in prices.
Protip: Against conventional wisdom, do your best to not ride the hype train. The hype usually dies down over time, and what could look like a good trade might end up in an unfavorable situation.
4. Other Critical Factors
Patterns and trading styles also influence the going price of cryptocurrencies. Traders use trading signals to advise whether to buy or sell, which are usually based on market trends and the current crypto climate.
Additionally, traders can pressure the market to either buy or sell large volumes of crypto to turn the tide. Include the whales into the equation, and prices can go from one point of the scale to the other end in an instant.
Protip: Pay attention to trader signals and follow them appropriately to make the most of every trade.
Crypto trading is a fun and engaging market – you never know what to expect. Prices may change without prior notice, making it one of the reasons why people invest in this alternative currency.
But if you’re looking for a great and stable investment, go with the Ethical Token. Now running on the Polygon Mainnet, ETHi is a token based on rent-to-own real estate. Buy ETHi now.
