Why is crypto going down? When crypto will go up? Factors influencing the price of digital assets

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Why is crypto going down? When crypto will go up? Factors influencing the price of digital assets

There is one sure thing about crypto: dynamic changes. It’s important to know why crypto assets are going up or down. Multiple factors influence cryptocurrency price. They include news events, the hype surrounding specific projects, speculation about the future value, or support that can affect the price. Asset value can be influenced by new whales entering a project who have their business in increasing the value of a coin/token.
Tokens with a good community reputation are likely to have long-term value because increasing numbers of people will be willing to purchase them. At any given hour, any crypto-asset value might rise or fall by 5% to 10%. Altcoins have been known to have even larger price changes.
Below you can find the most important priorities when choosing the right project/token/coin and factors which drive up or down the price of digital assets. After reading this article, you'll know a lot more about what makes cryptocurrency valuable.

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article avatarMwila Wise

Listing Head @ Excoincial Exchange

What drives up or down the price of digital assets?

First of all it's very cardinal to understand that cryptocurrencies or digital assets are very volatile in nature excluding stable coins. However, there are many factors that drive these digital assets up or down, Firstly is the issue of mass adoption by global institutions like Central bank digital currencies CBDC, this move makes the global market increase its trust and more interests to the investors. Secondly, Bitcoin EFT approval by SEC becames a dream come true for investors which they have been waiting for a long time. Thirdly, legalizing of these digital assets by countries like El Salvador etal, in short prices of these digital assets rise because of positive speculations or fundamentals. Digital assets also go down because of negative news and speculation from global leaders for example China cracking down on Bitcoin by banning it and closing down of mining operations, Nigeria's refusal to allow banks in trading Bitcoin and other currencies, Elon musk crack down on purchasing Tesla cars with Bitcoin. In conclusion, digital assets go up and down because of negative and positive speculations based on fundamental calls by adoption and crackdown that give investor confidence or distrust.

What’s your most important priority when choosing the right project/token/coin?

There are many projects with spectacular missions that have mushroomed on crypto sphere. However, there are several priority or construction that are make before choosing a project; - how powerful and dedicated is the team behind the project, - Has the team undergone any auditing certification, KYC/AML verifications, - How good is the community support for the project, - How's their roadmap and their whitepaper, - do they have enough liquidity for their currency and is it locked for a minimum number of 3years if it's a DeFi project, - Have this project partnered with several media houses and exchanges. Al these question and other analysis helps me consider effectively over what project I should invest in.

article avatarSaeful Arifin

Airdrop Analyst, Trader

What drives up or down the price of digital assets?

I think there are several factors and as follow: 1. Availability vs demand the limited Availability of cryptocurrencies and its uneven distribution to increase its popularity as well as price. The increase in asset prices is partly due to an increase in the number of requests in recent years. 2. Adoption in the real world Many countries have legalized the use of crypto as a means of payment. The adoption of digital currencies into the real world, if done massively or at least legally in many large countries, will increase in value. This is due to the limited number of crypto assets. And by being adopted into real life, the demand will increase and of course trigger price increases. 3. Miner production costs The cost to mine crypto money is one of the determining factors for the price of the cryptocurrency. For example, bitcoin has a high production cost because it has to have special hardware which is usually assembled with classy and expensive hardware, CPU, GPU, server, and cooling system as well as electricity costs incurred. 4. Regulation Although digital currency cannot be intervened by any government because of its decentralized system, when cryptocurrencies enter the mainstream of a country's financial system, then that country can intervene which of course can affect the price of cryptocurrency. For example, China banned bitcoin mining throughout its territory, UK banned Binance, the world's largest crypto asset trading company, from operating in its country. There is also the discourse of imposing taxes on cryptocurrencies in Indonesia which is still being discussed by the relevant agencies. Interventions like these can impact crypto prices globally. 5. Important figures One of the most obvious examples is Elon Musk who often tweets about certain cryptocurrencies on his Twitter account. So great is Elon's influence on the crypto world, with just one tweet, he could inflate the price of Dogecoin, which was included in his tweet. 6. Fear and greed The greedy nature of the public who buys a lot of crypto money like bitcoin when there is no price movement means that in the future the price will rise even higher. The more people who buy cryptocurrencies, the higher the price of the cryptocurrency and this affects other people to buy bitcoins too. When the price of bitcoin has almost touched its highest price, many people are trying to make a profit by selling their bitcoins. The more people who sell their bitcoins, the more the bitcoin price will fall.

What’s your most important priority when choosing the right project/token/coin?

My main priority is that I must be consistent with the project and help it progress to a successful one. And when I hold the project, I must confidently not be easily provoked by other people/FOMO.

article avatarGeorge Austin

Mor-Wey Logistics Limited

What drives up or down the price of digital assets?

Crypto trading is like the stock market trading. The direction of the prices is usually guided by the influx or withdrawal of invested market capital. A project with a surge in its market capital indicates more funds from investors and people pay attention to such details. The scarcity of the assets. The simple basic principle of economics applies here as well. When the quantity of an asset in circulation is high above 50% of its total supply, it indicates that its investors are holding and not selling. Such indication points towards prospect and everyone would want to have some in their bag. Information, sometimes rumours can cause an accumulation of assets by investors or its panic sell. Positive information most times yields good results if it's feasible and negative information has its own effect as well.

What’s your most important priority when choosing the right project/token/coin?

Before investing in any project, it is important to pay attention to its use case and road map. What are their plans, their vision? How does it ameliorate societal problems? How does it empower sustainable development of our economic, social and financial problems? Does it advance any particular sector in technology in respect to the future? The objective and goal of a project is imperative when making investments. This in a way gives confidence of its longevity and perhaps, its success as a business. Then comes the money. How much is invested, and in what duration? Who are they partnering with? What is expected in return? These questions helps steer one in making a decision on whether or not to invest. Of course, there are projects with good white paper but they never seemed to make it. Yet, the right questions and good research helps limit the risks of fake investments and guides one on the direction with prospects.

article avatarchinecherem ogugua

Self employed and motivated crypto trader and defi analyst

What drives up or down the price of digital assets?

A digital asset is an asset in which the buying and selling of it takes place online through complex processes on a blockchain under seconds. The price of these assets fluctuate as is the normal behavior of commodities in the market. The price of any commodity whether digital or fiat or goods or stock is primarily affected by demand and supply. Other factors may include: 1 News: this is the most good and bad factor that affects the price of crypto currencies because most people love to bug or sell news about any crypto in order not to get caught up in the wrong side of things. 2 listing and delisting on exchange: as the name goes, once a digital asset is listed on any exchange (cex or dex) the price tends to increase and vicer versa for delisting. 3. Politics: many countries do not support the use of crypto currencies and some who have already begun may later get banned by the government. This affects the price due to the fact that so many people will want to take their coins down in order to prevent shutdown. 4. BTC halving 5. Geopolitical events 6. Release of new Blockchain upgrades like eth2.0 7. Crypto innovation like the nfts, metaverse and other innovations The list continues

What’s your most important priority when choosing the right project/token/coin?

When choosing the right crypto I look out for a list of things 1. Tokenomics: the tokenomics tells us how the token actually originates and now the team would allocate funds for various projects. Like the initial supply, the listing price, the initial market cap, if it is deflationary, information about burning, and so on. 2. I look at the road map: the plans they have like plans to prevent dumping after presalers take profit, plans for each quarter of the year and so on. 3. Team: the advertising, their coordination and manner of replying questions on discord, telegram or twitter. 4. Staking apy if there is any 5. Usecase

article avatarRichard Trummer

OTC Deals. ICO Advisor at Cryotoknowmics, BITOZZ and More, Strategy, Investor Relations, Big Network in The Cryptospace

What drives up or down the price of digital assets?

Behind every market are actual real people. And those people go through specific cycles in their emotions which influence their behavior, which influences price action. Let me explain: If traders perceive, that the market is a bull market, they trade by betting on price going up and setting stop losses at certain levels. There are always bears and bulls fighting about price direction. Bears may then try to bring price down, but if the bulls are stronger, price will keep moving up. If the bears win, price will go down. Also the market so far, in crypto, moves in 4 year cylces. About one year after each BTC halfing we get a bull market, because BTC gets more scarce. After BTC , ETH and then the oher ALTS move up. Once the bull market peaks price will reach a low point approx. one year later and then consolidate for 2-3 yeas before the next halfing takes place and everything starts all over. This time, we have much more money in the market because of institutional investors looking to get their piece of the pie. This is why many people think,this cylce could extend much longer. Nobody knows for sure though. I don`t want to go on tooo long. Conclusion is: Emotions of traders play a huge role if prices rise or fall. Furthermore the whales(holders of a huge amount of a specific coin) play their "games" and can move the market, cause fake-outs and the like. And last but not least - the news that hit the market also have an impact on how people feel - which in return impacts their trading behavior/price movements.

article avatarJacek Kołodziejczak

Blockchain | Web Developer

What drives up or down the price of digital assets?

I believe that the price of digital assets drives up the popularity of a given cryptocurrency, its usefulness and capitalization. If the project is promoted by a famous person, it can also help to increase the rate. When it comes to declines, emotions most often cause above-average declines.

What’s your most important priority when choosing the right project/token/coin?

When choosing the cryptocurrency I want to have, I am guided by the team behind the project and the chance whether the project will be useful in the coming years.

article avatarVictor Osibajo

IT Consultant / Certified Crypto Trader

What drives up or down the price of digital assets?

The main factor that influences the price of digital assets to rise up or down are: 1. The team behind the project, their capabilities on meeting the demands of the roadmap in conjunction with the maximum supply and circulating supply. 2. Staking also helps digital assets to maintain their price. When a large portion are on staking with incentives, holders will not want to catch out in haste 3. Regular updates with a huge social active community base also goes a long way. When there is a trading contest, new partnership, product release. Holders and supporters do share, retweet, like etc which makes such to get across to a large audience and adversely affects the price most often upward. 4. Institutional Adoption: When a large institution with huge merchants embrace crypto such as PayPal, Mastercard etc, this information is disseminated across millions of their users and many tend to join crypto through this which mostly leads to a price surge,

article avatarStanford B

Crypto trader, Decentralized finance market analyst, investor and professional crypto educator.

What drives up or down the price of digital assets?

Demand due to speculation: The price of digital assets is tied to the demand (amount of buys) from people who want to own that particular digital asset. As more people buy than sell, the asset's price tends to increase. A reverse case could occur if there are more sales than buys. Usecases: The functions a particular digital asset has can drive up its demand. For example, digital assets that provide an opportunity to earn yields or interests may increase the demand of that particular asset, as users may view it as an investment opportunity.

What’s your most important priority when choosing the right project/token/coin?

1. Use cases, 2. Team background, 3. Partnerships announced, 4. Private sales funds raised, 5. Tokenomics (document explaining the token economy)

article avatarArindam Majumdar

Crypto Trader

What drives up or down the price of digital assets?

The price of digital assets was highly dependent on mainstream news. A good or bad news affected the price of a digital asset severely. While a good news about a cryptocurrency or cryptocurrencies in general brought more investors to the cryptoverse, a bad news repelled some of them from the market causing a plunge in price. However, since Q4 of 2020 the mainstream media started covering the news about cryptocurrencies in a better way after institutional investors made it official about the crypto hodlings. Apart from rise of some meme coins caused by statements made by influential people, retail investors are more aware than before about investment of cryptocurrencies. Generally the retail investors now tend to understand the underlying technology around a crypto project instead of being a victim of pump and dumps. Though it is yet in a very nascent stage, yet its happening.

What’s your most important priority when choosing the right project/token/coin?

• I look at the roadmap • The activity of the community • The profile of the developer(s) • The project competitors • Usability • Incentives

article avatarMashell Chapeyama

Crypto researcher and writer- Copywriter

What drives up or down the price of digital assets?

There are several factors that influence the prices of cryptocurrencies. And here I will discuss a few of them. Breaking news: Some breaking news, especially involving cryptocurrencies or legislation influence their prices. For example, if the action of a government is positive towards cryptocurrencies, their prices rise and vice versa. For example, the decision by the Chinese government to ban bitcoin mining negatively affected the prices of BTC. The news that El Salvador has adopted BTC as a legal tender helped to increase the price of BTC. The recent bull run of BTC could have been necessitated by the news that United States has approved some BTC Exchange Traded Funds (ETF). And we have seen the number of countries approving ETF increasing. Market Sentiment: Market sentiment is about how buyers and sellers of a certain cryptocurrency think about it. For instance, recently market sentiment led to the rise of the price of Shiba Inu. If the market expectation is high on the possible rise of the price of a cryptocurrency, that has positive pressure on the price. Demand and supply of the cryptocurrencies: When there are more buyers of a cryptocurrency than sellers, the price of the coin increases. When the number of sellers of a cryptocurrency is higher than that of the buyers, the price increases. Fud: fear, uncertainty and doubt (FUD) negatively affects the prices of certain coins. On the other hand shilling has a short term impact on the price of a certain coin. Recently, we noted that once Elon Musk talked about a certain cryptocurrency in a positive way, its price would rise. Change in token supply: The change in the volume of the circulating supply of a coin may affect its prices. When the supply of a token decreases, all other things being constant, the price of the token increases. That is the reason why come projects burn their tokens at an established rate. A burnt event decreases the supply of the token, hence positively influencing its price.

What’s your most important priority when choosing the right project/token/coin?

Personally I look at several fundamentals of the coin. One of the things I look for is the network it exists on. I normally favour projects on Tron blockchain and Binance blockchain. This is because of the cost of transactions. The exchanges where the coin exists: I like a coin that is on several exchanges that include decentralized exchanges and centralized ones. This gives people much flexibility when trading the coin. Liquidity of the coin: I prefer a coin which has high liquidity. This means that orders are easily fulfilled in short time. The team: I study the team behind the project and its history. A good team should have balance in terms of expertise and experience. A team made of people of different age and sex is appealing to me. The country in which it is registered is also very important to me. Ranking: For an already existing coin I look at the trading volume both in the short term and in the distant past. The market capitalization is also important to me. Therefore, I normally choose coins which are within the top 20 rank according to market cap at CoinMarketcap or CoinGecko.

Summary

In conclusion, several factors affect the price of cryptocurrencies, e.g. the limited availability and uneven distribution. Increased adoption in real-world markets can contribute to an increase in asset prices as well. By increasing demand for a limited number of crypto assets, their value will rise accordingly. The prices of cryptocurrency can be determined by the production cost, regulation, and benefits related to this asset. The fear of missing out and the greed that follows can motivate people to invest as well.
There are several aspects you should consider before choosing projects/tokens/coins. Pay attention to roadmap and whitepaper. Community support for the project is essential as well. And the most important how powerful and dedicated is the team behind the project.

This is not a financial advice. Please do your own research and consider the risks of trading cryptocurrencies.

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