There is a huge rise in the popularity of cryptocurrencies in recent years. One of the main reasons is related to the prices of some of the most popular units available on this market, such as ETH, BTC, Litecoin, Dogecoin, and more. For example, the current price of Bitcoin, which is the most popular unit, is around $40,000. That is much lower when compared to the value only two months ago when the price was around $60,000.
Still, the value is very high when compared to the same period last year, when it was four times lower. The same situation can be seen with most of the other cryptocurrencies. High volatility is one of the main features of this market, and the main reason why investors are attracted to it so much in the first place. It is crucial to understand that various factors are affecting the changes in this market.
The most recent changes are highly influenced by the actions of Elon Musk. This billionaire was cautious when it came to this market for a long time. However, things started to change in 2023, when he decided to invest in Bitcoin, and even allow his company, Tesla, to accept BTC payments. You should read more about that at aboutmyarea.co.uk.
Impact of Elon Musk on This Market
First of all, we have to mention that it seems a little contradictory when we look at the actions of Musk during this year and his activities related to this market. In the first quarter of the year, Elon announced some positive changes in his opinion towards Bitcoin and other cryptocurrencies. That was surprising because it was a well-known fact that he was not so interested in this market before. He even tried to make fun of it by introducing Dogecoin, which suddenly started to gain value in 2023.
The biggest action of this billionaire was a huge investment in Bitcoin, over $1.5 billion. Also, he then announced that Tesla will start accepting the payments with that currency. Also, other companies where Elon has a role like PayPal, OpenAI, The Boring Company, and others were planning to accept it as well. The influence of those actions affected the price to become even higher. His positive tweets raised the price by more than 10%, according to some research.
However, things recently started to change, and it seems like this entrepreneur is again suspicious of the potential of this market. Elon stated that he is planning to sell all of his Bitcoin and that Tesla will stop accepting this digital currency. Only a single post on social media affected the drop in price by more than 15%. It is interesting how marketing and promotion can be important today. On the other hand, while he had some impact, it seems like the market is more stable now, and that the value won’t return at the same point as it was one year ago.
Public figures can often affect some changes in the market. The best example can be seen a couple of days ago when Cristiano Ronaldo removed the bottles of Coca-Cola from the table at the press conference and advised people to drink water instead. That action caused the value of this company to fall by more than $4 billion.
Factors That Are Influencing This Market
The main reason for such high volatility is related to many factors that can influence it in both ways. It is crucial to learn more about these factors before you start investing in cryptocurrencies. The most important is to determine the right unit and the right moment for your investment. While most popular choices offer higher stability over time, there are some more affordable solutions with a high potential to become more expensive in the future. One of the main factors is supply and demand. It is a simple economic law where the prices will go up when more people are interested in buying some assets.
Also, when more of them are trying to sell some units at the same time, the value will drop. That is the best explanation for the situation in 2017 when BTC was at the record value of near $20,000 and then faced a huge drop to under $5,000 in the next few years. The pandemic also had a big influence on this market since people became more interested in alternative markets and online payments. The great feature of many cryptocurrencies is that they are decentralized, which is a great way to protect your funds in case of recession. According to many experts, there is a high chance that the world will face another recession in the following years due to the crisis caused by the pandemic.
Besides that, official regulations can be very important as well. For example, India and China had some laws that are preventing people there from investing in cryptocurrencies. However, India banned such a law, while there are some indications that China will do the same. That will have a positive effect on the market and can lead to the positive movement of prices as well.
On the other hand, the media plays a big role, and public figures like Elon Musk, Jeff Bezos, Bill Gates, and others can have a big impact on this market. Also, we can find many predictions about its potential. However, you have to be aware that some people might be big investors as well, and their posts are there to affect the values. The same is with Musk. His Dogecoin cryptocurrency is becoming more valuable after his posts on Twitter.
The most important features of cryptocurrencies are related to technical aspects and stability. Frequent changes in values are not surprising when we can see how a simple post on social media can affect it. Still, we think that it will remain stable in the following years. According to many experts in this field, the BTC price might reach a value of over $100,000 in the next few years.