CryptoWhat Factors Can Influence the Value of Crypto?

What Factors Can Influence the Value of Crypto?


Crypto trading has become one of the most widespread activities for new traders and veterans alike. Prices of crypto tokens and new crypto projects have reached monumental levels (even in the realm of 1000% changes in value for some crypto tokens). There are many stock traders who subscribe to one of two main foundational factors that influence the price of investment vehicles: fundamental (news or events) and technical (chart indicators or price action). The crypto space (and its tokens) has its own set of factors that have a major influence on the price of crypto tokens.   

1. Node Count

Crypto wallets are a way for traders to analyze and understand the value and demand of a specific token. This can be compared to the supply of shares in the stock trading world. If many traders have acquired a crypto token, it is assumed to be more popular than others. This can have a profound effect on the price of a particular crypto token.  

2. Current Supply of Crypto Token

The currently available supply of specific crypto tokens determines whether the price will be more valuable (in conjunction with the other factors listed here). If a specific exchange has a large amount of crypto-heavy users who are interested in a specific token and there are only 5,000,000 available, the price would be higher than if there were more than triple that amount (of course, other factors such as market sentiment must be considered).   

3. Token Availability on Crypto Exchanges

Tokens are routinely delisted or not offered on specific crypto exchanges based on many factors that can change from one day to the next. If a large market event occurs or trading is stopped for a specific security or crypto token, traders (even institutional ones) tend to take notice and want to enter buy orders. This is called “trading the news.” For instance, if the matic price begins to sharply increase based on a few extremely large trades or a news release by the project’s founder (or a filing targeting that crypto project/token specifically), the price may fluctuate wildly.    

4. Competition/Rival Crypto Tokens

The crypto space is filled with competition (down to the imagery on specific tokens and methods in which free tokens are used to gain users’ attention). Tokens and crypto token projects can be remarkably similar which has an interesting effect on the popularity and price of a specific token or group of tokens. Fiercely loyal fans of crypto projects and tokens have been known to influence the large-scale buying of specific tokens or dumping of rival tokens based on a tweet or negative campaign against a project they dislike.  

5. Government Regulation

Governments around the world are implementing broad regulations aimed at implementing rules that on first glance are focused on rooting out cyber theft of crypto tokens on major crypto exchanges and enforcing the tax law for said country to gain revenue for that country’s government. These regulations not only affect the ability to trade crypto also influence the price of a cryptocurrency.  

Cryptocurrencies were invented on the basis of free,anonymous trade of currency. If regulations stand in the way of this (and trading is limited to a specific geographical region or exchange), this can influence the crypto tokens price in a negative way. On the flip side, if a country is relatively regulation-free then a crypto token or crypto on a whole becomes more valuable as a way to avoid the modern banking system (or fiat currency) and continue to enjoy anonymous financial transactions.   

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