To understand why do cryptocurrencies rise and fall in value, we must be very clear about what it really is. Cryptocurrency is a digital currency without physical form, which can be privately produced on a high-tech computer through a system known as Blockchain.
Anyone who has the knowledge, the necessary funds and everything that is required for the production process can produce their own cryptocurrency.
That is why the production of digital currencies is within the reach of the majority independently and anonymously. This keeps them out of the reach and control of any government or banking entity.
Who controls the issuance of cryptocurrencies?
There are no established legal norms that regulate them, which allows them free movement in their quotations and price fluctuation, which constitutes a high risk of fraud, since they do not have any type of guarantee or legal protection.
Not all cryptocurrencies are bad projects, some have been sustained over time and have been profitable for those who own them.
How is the value of a cryptocurrency established?
The value of a cryptocurrency can change at a much faster rate than the rates of fiat money currencies due to its nature, Valuation and market capitalization usually occur on any given day, motivated by some purchase, a news item or different values that can influence its supply and demand.
Why do cryptocurrencies rise and fall?
Some of the factors that help us solve the question Why do cryptocurrencies go up and down are:
- The balance between supply and demand
- Their usefulness
- Sentiment
- Speculative practices
- The so-called “whales”
- Low adoption
How does the cryptocurrency market work?
Cryptocurrencies are mainly based on people’s trust, their rates depend on supply and demand, that is why people who invest in them should closely follow the daily fluctuation in order to act in time.
Is it good to invest in cryptocurrencies?
Despite their fluctuation, cryptocurrencies are considered an easy income and a proven alternative investment. The market is promising and very dynamic, which implies large and constant price variations.
What causes your price to go down?
As it depends on the perception that people have of them, the more people are interested and want to buy the currency, the higher its price will be, this can change quickly, and news and public opinion are very influential.
There have been cases in which false news or comments from influencers have caused a currency to lose value significantly. In addition, the prices of these digital currencies are influenced by the prices of their peers, and the main currencies of the world economy.
Whenever you are going to invest in a currency do not forget to study your project, remember that cryptocurrencies rise and fall in price very quickly and without notice, invest money that you will not need very soon, and be determined to learn about this wonderful world.
The views and opinions expressed herein are solely those of the author and not necessarily those of Bixxus. Your cryptocurrency investments involve risks and you should do your own research.
