Home Business What Determines the Value of a Cryptocurrency in 2020

What Determines the Value of a Cryptocurrency in 2020

by Dangula Bingula

The whole system of functioning of the cryptocurrency market is quite well designed. Background technology plays a big role. The factors that determine the movement of currency values ​​are numerous and should be taken into account before entering the business.

The importance of monitoring the value is reflected in the possibility to gain insight into the right moment for the investment. Everything is rather transparent and access to data is provided at all times. This market is resistant to censorship, so there’s no need for additional assurance.

The factors that determine the price don’t differ much from those that prevail in other markets. However, that doesn’t mean that they’re absolutely known to us, considering that the cryptocurrency industry is still unknown to most people. That’s why every responsible trader is recommended to keep a trading diary. It doesn’t take much time on a daily basis and will mean a lot in achieving good earnings.

Are you also thinking of becoming part of this industry and starting to trade cryptocurrencies? If the answer is yes, now is the time to think about it. We will try to help you by reviewing the most important factors that affect price movements.

Movement of supply and demand

source:pxfuel.com

Supply and demand determine the value of anything that can be traded. They are what make a market and without them functioning wouldn’t be possible.

The principle is very simple. As long as numerous buyers are interested in bitcoin and many who are willing to sell them, the price will rise and remain constant. As soon as the interest of buyers decreases, the sellers will be forced to lower the price. Due to the limited supply of many cryptocurrencies, with the increase in popularity, the price is slowly increasing.

This is the simplest way of insight into the fluctuation of values ​​and the economic principle is based on this. By looking at the available tables on a daily basis, it is possible to see what the current situation is and plan the next steps accordingly.

Public media

source:ebu.ch

The mood of the public can certainly have an impact on the movement of cryptocurrency values. The influence of the media on people’s consciousness and the way they think has always been huge. So in this case, too, all inquiries about this market go through these channels. Each piece of information served carries a certain weight that people will decide to accept or not to accept.

For this reason, the publicity given to both coins and platforms is important. So, if a coin is targeted by hackers and the public finds out through the media, there’s a high probability that interest in it will decline, and thus the price. Also, with the acquisition of media support and positive public quotations, the increase in value is certain.

Still, developers have found a way to deal with this. There are frequent examples of those who work through various forums and sites, through which they spread a good word about coins and thus encourage people to invest.

Node count

source:coincentral.com

The number of nodes is another useful tool in predicting the price. This method can measure the total number of active wallets online at a given time. Combined with the total market capitalization of currency and comparison with other currencies it can be a very good indicator of value.

In addition to enabling fair value analysis and whether it’s overvalued, it’s also useful in showing community strength. The number of nodes is proportional to the strength of the community. The larger the number, the stronger the community, which also provides some security to the users.

The situation often changes and the information you get today may not be valid in a few days. That’s why it’s necessary to inform and analyze the market on a daily basis. All this is facilitated through various applications that are offered to users and which provide easier trading. Bitcoinstorm points out the fact that you can choose between the automatic and manual methods as a special advantage. And, depending on that, you can control your own trading activities or leave this assignment to the computer.

The movement against fiat currencies

source:forbes.com

First, let’s explain the basic difference. The main difference between fiat money and crypto money is that fiat money is centralized and declared by the government as a legal tender, while crypto money is still treated as illegal.

Doing business in Fiat’s system today is widespread around the world, and in that way, countries can control the fluctuation of that money. While, on the other hand, cryptocurrency, because it hasn’t yet been declared a legal tender, isn’t controlled by the government.

Both are characterized by market stability and are used for the same purposes – to buy and sell. However, once the value of the fiat currency falls, the price of the bitcoin rises because then more fiats can be obtained for one bitcoin. In this way, these two currencies are linked and affect each other’s prices.

Community support or bots

source:pxfuel.com

In order to highlight their coin as much as possible on the table, traders are making some serious efforts. These steps make their voice reach those interested and thus benefit over time. This is achieved in two ways – through a well-organized and united community or trading bots.

Perhaps one of the most valuable means to an end is an active and well-coordinated community that functions as one. One in which the activities of all members are fully aligned with the collective vision of the team. They are made up of real members, who have a common goal in front of them – more precisely, unpaid public relations services that support the project with their engagement.

In contrast, trading bots are a product of artificial intelligence and they encourage the movement of the price of cryptocurrencies by artificial demand for money.

The long-term value of digital currencies already depends on many different factors, and it seems that over time, with their global acceptance and legalization, the number will increase. In any case, every trader and investor should strive to regularly monitor the market situation and analyze it in order to create a potentially good ground for big profits.

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