How does cryptocurrency market prices value increase? Explained

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How does cryptocurrency market prices value increase? Explained

Market price is driven by several factors. Many of which are over my head being from outside of the financial sector. However, you don't need to have worked on the floor of the stock exchange to understand crypto prices.

Once upon a time Bitcoin was born. In a short amount of time 1 BTC was equal to $1 USD. In January 2016 (when I received my first BTC payment) the cost was $440/BTC. Today the cost is around $7,000/BTC (and, we've seen a high over $20k/BTC). So, what is it that gives this currency its value?

The answer is simple and apparent; FAITH.

That's right, the same thing that gives the Dollar, Euro, Peso and Ruble their values; faith. The users of the fiat currencies have faith in their govenrnements to insure the continued value of their monies. Likewise, the users of Bitcoin have faith in the decentralized, fully transparent safety and security of the Bitcoin network itself.

Aside from faith in the currency or token you are using/HODLing, there is another, very simple concept that determines the rise/fall of the price of that crypto; SUPPLY AND DEMAND.

That's right; there will only be 21 million Bitcoins ever mined. So, the more people have adopted BTC as a payment platform; the more the value has increased. We even saw a massive spike in price in December 2017 when the traditional investment world decided to, however briefly, play in our little crypto pond. Once they became bored; we are back to our normal values again.

Aside from simple faith, and Supply and Demand; there is one final concept that applies to price fluctuations in the cryptosphere; FUD (aka Fear, Uncertainty, Doubt). Unfortunately, with a world less than a decade old; the cryptosphere is filled with FUD. When someone wants to try to harm a crypto project they sling FUD. And, as with all things online, bad news travels the globe faster than good news; even when it is untrue. So, one statement can bring down a project. Making FUD is enemy number one.

These three factors are essentially the cause of every swing in crypto price.

Good luck with your visit to the cryptosphere. Happy HODLing!!!  


Danny Donahue


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