Wondering why #cryptocurrencies are so volatile? Here is a short video for you! #bitcoin #ethereum #litecoin
Like everything on the market, prices vary due to different factors. The most important factor and the basic is offer and demand. To explain this simple, the demand is people wanting something and the offer is the ability of the industry to supply the product. If the demand is lower than the offer, naturally the price of that article will be less. On the other hand, if the demand is higher than the supply the price will rise.
In the cryptocurrencies we have a bunch of different factors that affect the price. Since cryptocurrencies are something barely new, regulations can mean a big blowout on the price. Cryptocurrencies are a decentralized asset that have been moving huge amount of money. Since crypto have become so big and the owners are anonymous, governments started looking for way to tax this type of trading. This have created at some points, mistrusts on crypto owners causing selloff’s. Other factor of the volatility is the huge crypto holders.
Price can be really affected by the ability of crypto holders to sell huge amounts of currencies or the ability of investors to buy large amount of currencies. This creates an unbalance in the offer and demand causing the price to rise of fall dramatically. Another factor is the media, since cryptocurrencies have grown also have done the attention of the media to this matter. This can affect the public image of this digital assets taking away possible investors.
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https://blog.goodaudience.com/rise-and-fall-of-cryptocurrency-rates-volatility-factors-b900e32fc87