Some weeks ago, investors of cryptocurrency were on the edge due to the excessive bleeding of currencies in the market and as is known cryptocurrency is a new revolutionary type of currency and almost everyone is investing in it, so you could imagine the level of fear that went down during that period of blackout.
Confusion and worry tore the hearts of most investors towards the reason of this bleeding and because of this, i would like to share some facts of what could be the reason for fluctuations in price of cryptocurrency.
WHAT WERE CRYPTOCURRENCIES DESIGNED FOR
Just like basic currencies were made for convenience of buying and selling and Gold is mostly used as assets, cryptocurrency was designed as a unit of exchange and as a place to store assets without relying on a central bank.
FACTORS THAT COULD CAUSE FLUCTUATIONS IN PRICE OF CRYPTOCURRENCY (POSITIVITY OR NEGATIVITY)
The following things could be the drivers of cryptocurrency price, but it is not limited to these.
-MEDIA AND PUBLIC PERCEPTIONS ;
Reports of the media either positively or negatively can affect the prices of cryptocurrency especially Bitcoin and also on the perceptions of the public.
In this situation, an avenue to manipulate the public as many media are operated and owned by individuals which is a major opportunity for price manipulation, either positively or negatively and this can cause prices to fluctuate.
The public also has big bearing on the value of cryptocurrency. People could read positively to its new innovations as multi-signature security on wallets or payment gateways come online and negatively cause of associations with criminality e.g the hacks of cryptocurrency exchanges like that of Mt.Gox.
And because some cryptocurrencies are reusing the Bitcoin code but just changed some specifications can cause the fall/rise of Bitcoin price to affect other coins.
-UTILITY AND DIFFICULTY LEVEL
Utility is a very important factor in the growth, development and the fall of any resource and cryptocurrency is not exempted from this fact. If it is not used and properly utilized, it would have little or no perceived value.
For Bitcoin, the utility is high, its high level of difficulty and energy usage gives it a reasonable price and as such is suitable for investment and changes in this utility level can cause the price to fluctuate.
The security level of the blockchain and the higher the mining difficulty, the higher the price and thr harder the coins get to mine.
This can have a serious effect on the price.
-SUPPLY/DEMAND AND ENERGY CONSUMPTION
Prices of commodities is often tied to supply/demand, this is a basic economic concept that affects all walks of life and cryptocurrency is part of it.
Block reward halving's, like that of Bitcoin in 2016 caused the price to slowly increase as the halving approached, due to the reduced supply of new incoming coins imminent and this can affect the price of many cryptocurrencies.
Alot of energy(electricity) is needed to secure blockchains and this has an effect on price because it takes a certain amount of energy on average to mine one coin.
-CONCLUSION
These factors are contributory to rise and fall of cryptocurrencies, they could just be that reason for the greenness or redness in the cryptocurrency market.
Understanding the ethics of the system can go a long way in calming your nerves when you see a particular coin go red.