cryptocurrency

How is Cryptocurrency Price Determined?

The crypto market has a crucial difference from the traditional markets – it does not depend on governments or central banks. That is, it is impossible to increase the supply of coins or cut their emission artificially. The supply of every specific asset is established in its algorithm. 

However, many crypto projects can increase the demand for their assets by cutting supply. For that purpose, they burn tokens. The supply-demand ratio principle is the main factor that determines crypto prices. Here, everything works the same as in the traditional market. If one specific coin is overbought, demand exceeds supply, and the price grows. If the asset is oversold, supply is bigger than demand, and the price drops.

What determines crypto price?

 Let’s see other factors:

  • Media and news. When some specific asset is advertised and promoted, its community expands, increasing the adoption of the asset and, thus, growing the demand for it. When some bad news appears (real negative situations with the company or rumors), the demand drops, thus, the price falls too.
  • Pump and dump. Given that the demand-supply ratio plays a crucial role in crypto markets, some investors find a way to manipulate it. For example, large investors that have a large number of coins can cash them out massively, causing dumps and price drops. Or, on the contrary,  start buying some unknown and cheap tokens, creating a buzz around it and pumping its price.
  • Regulations and restrictions imposed in some countries. Remember when China banned crypto mining, and it caused a massive outflow of miners from the country?
  • Collapses on crypto platforms can also cause the collapses of coin prices crypto. For example, when the FTX exchange’s financial problems were uncovered, investors started to massively leave the platform, withdrawing funds from it, causing the demand to drop, and so, the market dropped.

To see crypto prices in real time, you may use any reputable resource, for example, Coinmarketcap. If you want to trade and invest, use large and reliable crypto exchanges like WhiteBIT.

Where to Check Crypto Prices?

The digital asset market is expanding with new projects and coins offering different purposes. The primary feature of this market is its instability and volatility, distinguishing crypto from traditional finance. Cryptocurrency is not under government or banking control, which is why the crypto market is so volatile, with prices changing every day and even every minute.

While such volatility can be dangerous, it can also be profitable with the right approach to trading. To be a successful trader, you need to investigate market trends, learn to predict the next movement, study internal and external factors affecting the crypto market, use quality tools, and not invest your last money. It’s also essential to pick a strategy and stick to it, keeping a cool head and not being guided by emotions.

The first step in trading is to investigate and analyze crypto prices. You can check out crypto resources like Coinmarketcap for up-to-date prices and charts or use the WhiteBIT cryptocurrency calculator if you want to trade. Successful trading requires knowledge and experience, so start small, diversify your portfolio, and always assess the risks involved.

Adrian

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