Latest news about Bitcoin and all cryptocurrencies. Your daily crypto news habit.
It seems that after the crypto crash in early 2022, digital coins are set to rise once again, and in full glory. It’s not a secret that crypto currency's value can be extremely volatile, which can result in serious profits or incredible and financially crippling losses.
Predicting the prices is never easy. Different traders take different approaches. Some rely on patterns that indicate a rise in price while others rely on insider information from celebrity investors.
Either way, there are multiple factors that affect cryptocurrency prices. If you are interested in learning more about this, take a look below.
The currency’s node count
The node count is a measure and a clear indication of how many active wallets are present in a particular network. This information can be found via a quick browser search or by looking at the digital currency’s homepage.
So, why is node count so important? To put it in simple terms, it shows how strong the community really is. If the node count is higher then the community will be stronger.
A high node count can indicate that the currency will stick around for years to come. A strong community equals a resilient coin.
Cryptocurrency exchanges
Crypto exchanges can teach you a lot about cryptocurrencies in general. These places are not just created for trading and investing in crypto, they are a hub where minds can exchange various ideas.
Cryptocurrency market information is available on all reputable exchanges but that’s not the only good thing about them. If a particular coin is listed on all the major crypto exchanges, it shows great interest which ultimately means that the coin has something to offer.
Furthermore, if an investor has to use multiple exchanges just to trade with a certain coin, the fees will rack up fast, making the coin less desirable.
Competition in the market
There are many cryptocurrencies in existence, and new ones are being developed every day. There are coins designed to change the way we view transactions and there are coins that are designed to entertain the masses, such as Dogecoin.
However, there are some coins that are constantly looking to push the barrier and create a world of transactions that are not limiting in any sense of the word.
The production cost
Another factor that affects cryptocurrency value is its production cost. Miners use special hardware and servers every day to verify transactions and produce new tokens. This activity allows decentralized cryptocurrencies to stay in business.
So, if the cost of mining increases there’s a high chance that the crypto in question value will follow soon enough. Miners will always try to cover the expenses with profit so their reward must be bigger than their mining expense.
The coin’s scarcity
Theoretically, the less the coin is available, the higher the price. From the ice age to the digital age, individuals always value rarity and will pay top dollar for things that are unique and one of a kind.
The same logic can be applied to crypto. Certain networks have a limit on the number of coins they can produce, while others have limitations on how many coins can be made each year to manage supply and price control. Either way, the max coin supply, and the current coin circulation number can be telltale signs of the coin's rocky or stable future.
Hype
You might think that hype exists only in the music and film industry. But over the years, social media has shown us how it can transform any topic into an all-out obsession. Crypto is an extremely popular topic on literally all social media platforms. There are millions of accounts dedicated just to crypto and crypto investment topics.
In most cases, certain coins can pick up a lot of attention and be hyped to unprecedented peaks of value. For this reason, keeping a close eye on social media platforms for the latest crypto trends will always play out in your favor.
Bottom line
Cryptocurrencies can be extremely risky and lucrative for individuals that are looking to invest. Their volatile nature is what makes every investor scrutinize charts on a daily basis while also looking for ways that might lead to a rise in value.
Knowing the various factors that affect cryptocurrency value will help you to minimize the risks of making a flop investment on the market and maximizing your chances of profit.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.