CRYPTOCURRENCY FLUCTUATIONS | UNDERSTANDING THE INFLEXIBILITY

Like we all know, the crypto is a virtual currency. Crypto is gradually becoming one of the most important currencies and it is a very good way to invest money.

Cryptocurrencies use cryptography for its security, another major thing about cryptocurrency is that the prices are not always stable. Cryptocurrency prices are unpredictable due to the fact that it constantly fluctuates.

There are major cryptocurrencies like Ethereum (ETFs) and BITCOIN (BTC). A lot of investors invest their money in this currencies but when the price fluctuates, the crypto investors and the traders may start wondering what was the cause of the sudden change of price, one important thing is that, whenever the price of a cryptocurrency fluctuates, it's either increases or a decreases.

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In this article, we would explode the reasons behind cryptocurrency fluctuations, digger the broad interplay of factors that drive this price movement.

ANALYSIS

• they are technical analysis that reach charts to predict the future prices of cryptocurrency, can also affect the prices of what's cryptocurrencies.
  Most times, crypto investors who make use of technical analysis may buy and sell crypto based on what's on the chart analysis, this can lead to fluctuation of crypto prices.

DEMAND AND SUPPLY

• most times the prices of cryptocurrency is usually based on the forces of demand and supply. In some situation whereby, the demands are higher than the supply, this can prompt the prices to increase.

On the other hand when the demand is lower and there is surplus supply, this can lead to the price dropping.
Just like the basic principle of economics, it also applies in the crypto market, whereby whenever the supply of crypto coins or tokens are limited, a demand would fluctuate with speed.

LIQUIDITY

• Cryptocurrency markets can be inflexible, prompting to fluctuating of crypto prices. When there are few people buying and few people selling, small crypto traders can inflate prices, leading to price fluctuation.

COMPETITION

• the launch of new crypto coins or tokens can affect the existing price of cryptocurrencies. When new currencies are launched some investors might stop investing in the already existing currencies, this can lead to dropping of prices.

SPECULATION

• often times give the currencies and moved by speculation, when crypto investors buy and sell based on predictions of crypto prices, whereby there will be increased in Christ and more crypto investors would be attracted, leading to increment of prices.

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DISADVANTAGES OF PRICES FLUCTUATIONS

REPUTATION

Regular price fluctuations can destroy the reputation of the crypto token or coin.

RISK IN INVESTORS

Constant fluctuation can affect the value of the cryptocurrency, this will make the investment value be at risk and few or no investors would want to invest.

ANXIETY

Fluctuating of prices can lead to emotional stress and anxiety for crypto investors, making them to always worry about their investment.

VOLATILITY

Fast and unpredictable cryptocurrency price fluctuations can lead to significant losses.

SECURITY CONCERNS

Frequent price fluctuations can attract scammers and hackers, making it unsafe for investors and traders.

ADVANTAGES OF FLUCTUATIONS

DECENTRALIZED NATURE

Fluctuating of cryptocurrencies display the decentralized nature of cryptocurrencies.

TRADING OPPORTUNITIES

Fluctuation creates chance for cryptocurrency traders to buy in lower prices and sell for higher prices, this will enable them to make more profit.

FINANCIAL INCLUSION

As we all know, cryptocurrency is a very good business and a good way of investing financially. Cryptocurrency provides financial investment opportunities, for both traders and investors.

MARKET EFFICIENCY

Price fluctuations help to allocate resources and assets efficiently.

INVESTMENT POTENTIAL

Where is fluctuation occurs in crypto prices, it can lead to a positive significant returns on investments, for investors who has timed the market correctly.

NOTE that these advantages listed above, comes with risk and it's very important to approve the crypto market with a clear understanding of the ups and downs.

conclusion

Cryptocurrency fluctuations are as a result of broad interplay of factors. When an investor or a crypto trader understand this factors it would help to navigate the fluctuations of the crypto market.
Realizing the reasons for the inflexible prices of cryptocurrency, crypto investors and traders can develop good strategies for managing the risk.

A reference article that explains more about crypto currency fluctuations

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