Exploring the Factors that Affect Changes in the Crypto-Market

The volatility of cryptocurrency certainly surpasses that of traditional investment markets. Due to the extreme level of volatility, prices can increase and decrease in just a matter of minutes, therefore having to explain to new investors what causes the high levels of volatility in the cryptocurrency market is vital.

Control of Market Demand

The highest appreciation and depreciation of cryptocurrency occurs based upon the supply/demand relationship. If more individuals are purchasing cryptocurrency, then demand will be higher and subsequently, the price will increase or vice versa. In contrast, significant depreciation in the value of cryptocurrencies will occur if large numbers of individuals sell their coins.

News and Market Sentiment

Market sentiment and news are also two primary drivers in the price movements of cryptocurrency. Positive worldwide developments associated with crypto will cause prices to rise, whereas negative news stories about regulations or hacks will both decrease the value of crypto and create price drops overnight.

Institutional Investors and Their Impact

Institutional investors, also called "whales," can have a massive effect on the value of an asset. Thus, when whales buy or sell, the price will change and affect everyone who buys or sells crypto.

Change in Technology

Changes in technology associated with cryptocurrency occur through both enhancements and developments; therefore, there are many opportunities for a change in an investor's perception of the value of and/or confidence in a particular cryptocurrency project as a result of every single technology development change impacting the crypto market.