The cryptocurrency market offers investors a lot of virtual coins. Such diversity makes it very difficult to make a choice. In addition, the price of croup is volatile. The rise or fall of the price crypto depends on many factors. Both economic factors and internal elements of the cryptocurrency market influence the price of crypto. The popularity of cryptocurrency has enabled the development and prediction of the current value of virtual coins. Investors use several options for analysis. This allows investing in cryptocurrency that will grow as predicted. What affects the price of crypto? Let’s analyze below in the article.
The current value of cryptocurrency today
Crypto prices have fallen dramatically over the past few months. Bitcoin has lost more than 80% since its record high in November 2021, when the crypto price live fell below $20,000 in June 2022. Other cryptocurrencies, such as Ethereum and Cardano, have also fallen hard, losing more than 85% of their value from their all-time highs.
But today the price of cryptocurrency is in the process of growth. Some currencies are stable and have minor fluctuations. Reasons for the rise in the price of cryptocurrency today:
- Financial markets already expected a key interest rate hike of 0.75%, which did not lead to a drop in stock live crypto prices. Thus, cryptocurrencies also showed no weakness.
- Higher interest rates give hope that inflation can now be better contained. Cheap money policies have greatly helped investment in recent years but have also greatly accelerated inflation. A return to sanity in monetary policy would be welcome.
- A rate hike could trigger a recession shortly. However, the prevailing hope is for a “clean up” of the markets. The shock of rising interest rates has been overcome, and markets have adjusted to higher interest rates.
- Cryptocurrencies continue to rise as stock markets rise. This is the case at the moment. Failure to contain inflation could lead to a downward spiral.
Unfortunately, the cryptocurrency market is not supported by the state. Therefore, the price of crypto can significantly decrease and increase. Legalization at the state level could help keep crypto stable.
The popularity of crypto despite price volatility
Typically, higher interest rates mean that risky investments, such as bitcoin and other cryptocurrencies, are no longer popular with investors. Higher key interest rates cause capital to flow into safer assets.
A new monetary policy is now in place, and risky assets are aligned with the new economic policy. In addition, rising interest rates are seen as a positive signal that central banks are taking inflation seriously. This provides a positive sentiment in the market and leads to the re-buying of risky assets such as cryptocurrencies.
If you look closely at the reasons for the price change, you will see that specific news reports are usually responsible for the rise or fall in price: in early April 2018, the price of bitcoin remained relatively constant at around €5,500. On April 12, the currency experienced a rapid price crypto rise, which continued in the following days, reaching a high of 7,800 euros on April 25. The reason for this increase? Probably a combination of several news reports.
Even the best market analysts can only guess why specific market movements occur. What is clear, however, is that major news triggers a corresponding reaction in the market. And after a significant price move in a short period, there are usually follow-up reactions. If the price rises sharply, many investors assume that the market will recover and want to take short-term profits and invest. If the market does take off, some of these investors will sell their cryptocurrencies again, causing the price to fall.