Cryptocurrency markets have always been turbulent, but the previous few years have been especially wild for investors throughout the globe. As the stock market has risen and fallen, many people have profited millions and others have lost huge and little sums of money.
But various industry experts must know how to profit from it during moments of volatility.
Determine the elements that impact the value of digital currency and how to utilize them to our advantage in order to understand how we can achieve it. You can check out the current market values at OKX
1. There Is Still A Lot Of Room For Growth In The Cryptocurrency Business
The cryptocurrency industry is still in its infancy as compared to the other forms of currency and gold. This is despite the huge media attention it has received over the years.
Cryptocurrency markets peaked at roughly eight hundred billion dollars even at their highest point in twenty thirteen The overall value of the gold market is around eight trillion dollars, while the stock market in the United States is twenty eight trillion dollars.
To put it another way, a smaller market implies that even the smallest factors may have an enormous impact on the value. Even if a single investor sold five hundred million worth of gold, the market would scarcely notice. However if anything like this occurred to Bitcoin, the whole market and the value would be thrown into chaos. Businessmen can use this time to launch many innovative and intriguing projects into the bitcoin industry since the business is still in its infancy.
2. They Are Digital Currencies
Virtual assets like Bitcoin do not have some such as cash or a commodity to back them. As a result, their value is entirely determined by demand and their supply. Since the number of cryptocurrencies is limited, the value is determined by the number of individuals interested in purchasing Bitcoin at any one time.
The value of the most popular cryptocurrencies is not backed by anything tangible, and governments cannot compel people to use them as money. That indicates that their worth is based only on trust. The value of Bitcoin will undoubtedly decline if people no longer feel it will continue to climb. As a result, the value might fall, which in turn encourages more people to sell, setting off a negative spiral. The inverse may also occur, resulting in an increase in values and the formation of very high value bubbles.
3. New Developments In Technology Are Continually Being Made
There is still a long way to go in the development of various crypto technologies. The concept of blockchain was presented in the Bitcoin whitepaper less than a decade ago, the industry has a long way to go before it becomes mature. Although many businesses have already used blockchain technology, it is being aggressively used in advertising campaigns.
When technology problems like the blockchain scalability issue aren’t resolved in the period many anticipate, the value of cryptocurrencies drops. You may also see their effects when network congestion and high transaction costs become apparent.
The opposite might also be true: major advances in technology can have a positive impact.
Bitcoin Lightning Network and Ethereum’s new popular applications are examples of structural advancement in the field of blockchain technology. In order to compete with existing cryptocurrencies, many new cryptocurrencies are springing up all the time.
4. Speculation
Cryptocurrency market volatility is mostly driven by speculation. This is a way for investors to wager on whether the value of various cryptocurrencies will increase or decrease.
Cryptocurrency market volatility attracts speculative traders who hope to profit by correctly predicting the market’s movements.
If you can predict when the value of Bitcoin will surge, you can earn a fortune. The same holds true for short selling a coin just before it goes down in value. In the cryptocurrency market, investors are continuously looking for clues about how the value may fluctuate in the near future. These speculative investments exacerbate the market’s already erratic behavior.
5. The Media
Because the cryptocurrency market is a tiny one with a lot of speculative activity, the news media has a significant effect on the market’s direction. Investors and speculators are continuously scanning the news for the next big event that will either launch or crash the market. Once an opportunity presents itself, everyone understands that the faster they buy or sell, the more money they’ll make.
The value of cryptocurrencies is influenced greatly by the media’s coverage of the market. The fact that many in the bitcoin business acquire their news from unreliable sources and social media isn’t helping.
Cryptocurrency-related news is often eagerly anticipated by the media. People have now understood how to make profits from the up and down trends in the value of Bitcoin. By adopting bitcoin as a form of payment, you might get some publicity for your company if the value of cryptocurrency rises.
6. The Profile Of A Crypto-Investor
The typical bitcoin investor’s profile is the last consideration. Cryptocurrency trading and investment has a low barrier to entry compared to conventional sectors, such real estate and the stock market. To invest, you don’t need a lawyer, a trade license, or a certain quantity of money. An internet connection is all that is needed to begin trading immediately.
As a result, the crypto market is favored by a large number of new traders from all over the globe. Institutional investors, on the other hand, are very wary of the crypto market.
Many people consider it too hazardous to even consider it, much less spend money on it.
Final Word
All of these variables combine to cause value fluctuations in cryptocurrencies that seem to occur at random periods. It seems unlikely that experts will ever be able to accurately foresee the cryptocurrency market. Even yet, knowing how quickly the industry changes might help you better promote businesses that utilize cryptocurrency, as well.
