What causes cryptocurrency to rise and fall?


The valuation of crypto in millions and billions has some expectations attached to it. It has usually been seen that every newbie that gets associated with the field has one thing in his mind and that is to make profits and gains. He is so sure that he trades like there is no tomorrow and sometimes the market favors him but at some times the market behaves rudely. This is the time when the market is on its downside and should be studied cautiously. Every new user is often warned about the bad consequences of the digital market of cryptocurrencies. The foremost warning is in the unpredictable behavior of the market. This unpredictable behavior of the market is due to a phenomenon that has a name that is volatility. This volatility is responsible for the price variation in a second or so. In this article, we are going to discuss some of the common trends of the market in the form of the rise and fall of prices. If you are just getting started in Bitcoin trading, check out how to buy and use your first bitcoin.

Demand and supply in the crypto chain

The traditional market around us is dependent upon the demand of its customers and the supply of resources for these demands from the industries and firms. You have commonly heard that as soon as demand decreases prices go up and vice-versa. Similarly, the crypto world is also dependent on the demand and supply of a crypto coin and another digital asset. Here the principle says, as soon as the demand for currency increases the supply has to be increased and vice-versa, thus here the principle has a direct relationship with each other.

The role of media

You have heard different opinions from so-called “experts” from different media groups that present the news like bitcoin or some other currency is going to stick out soon or so. But, this is not completely correct. Every news should be confirmed and analyzed before being acted upon. This hype created by the media networks often adds the factor of volatility in the crypto chain by either injecting the flow of coins or pulling the number of coins.

Regulation by governmental authorities

As now everyone around us knows about crypto and its derivatives, it is not a thing that you can hide from. The recent Covid outbreak increased the popularity of digital trade to such an extent that the government authorities of different countries have now started taking interest in this field and are planning to regulate this decentralized platform. Some countries have implied these regulations while others are planning to do so. In such countries where implications are on, you can see the difference in the prices before and after these were implied. Thus, this is an active participant in crypto price rise and fall. 

Halving and mining issues

The biggest factor behind the price variation is the availability of miners and the process of halving. By the process of halving every time a block is mined some value is lost in its generation that gets added to the price of bitcoin but at the same time gets consumed as the acts and regulations by the miner itself. So, this cycle keeps on going and the price gets variate with each cycle in the loop.

Holdings and sentiments

Though the role of sentiments in digital trade is nil, still some users bring this into operation. This creates problems for customers who intend to hold more and spend less. Thus, the supply slows down and as a result, the price gets increased. At the same time, if the holdings are more, these overshadow the role of new customers that intend to buy the crypto from the platform.