Important Factors Influencing Cryptocurrency Prices

by Sam Dilan
Important Factors Influencing Cryptocurrency Prices

Gone are the days when people found it odd to talk about using digital currencies. Today, cryptocurrency has withstood the test of time and become the hottest ticket to the financial market.

Many people across the globe are investing in cryptocurrencies, thanks to their better returns. Bitcoin (BTC) has become the world’s largest cryptocurrency by market capitalization due to its positive adoption and profitability.

But cryptocurrency is often considered a volatile asset whose value is seldom stable.

The volatility of cryptocurrency can make it difficult for you to put money in digital currencies. But if you are aware of the factors influencing crypto prices, you can make better decisions in cryptocurrency trade and can make handsome profits.

Let us find out what cryptocurrencies are, and which important factors are determining their values.

What is cryptocurrency?

As the name suggests, cryptocurrencies are digital currencies that exist online. Launched in 2009, cryptocurrencies have gradually changed the concept of using money as more people are now believing in virtual currencies.

Cryptocurrencies are supported by blockchain technology where their transactions are recorded on a publicly distributed ledger to ensure enhanced safety. Cryptocurrency is protected by cryptography which consists of complex mathematical problems that are hard to break.

According to crypto experts, if you cannot own a single BTC, there are over 10,000 cryptocurrencies available that you can buy. You can start investing in cryptocurrency through a crypto exchange where multiple digital currencies are traded every minute.

Cryptocurrency offers you multiple benefits such as freedom from financial intermediaries, quick and affordable transactions, and 24/7 availability.

Many global leaders have come forward in the support of cryptocurrency as the best alternative to fiat or traditional currency. One such global leader is Carl Runefelt, alias, The Moon, who has invested in more than 350 crypto startups.

He says, “The price of bitcoin keeps changing every second, and for new investors, it is necessary to understand the reason behind these changes. Examining its history or the factors that influence the rise and fall of bitcoin, everything must be studied.”

Factors Influencing Crypto Prices

Cryptocurrencies are digital currencies which means that they are unregulated currencies. The decentralized nature of cryptocurrencies makes them free-floating currencies with multiple market factors affecting their value.

As a crypto investor, you should carefully study the factors that play a crucial role in determining the price of a cryptocurrency since cryptocurrencies are volatile and you can end up losing big money.

Here are some key factors influencing crypto prices.

Market Sentiments

One of the key factors that play a significant role in crypto prices is called market sentiments.

There are many investors present in the crypto market and they create hype around a cryptocurrency to increase its value for some time. This creates an artificial rise in the value of digital currencies to lure more investors.

But when you are investing in cryptocurrency, you should avoid market sentiments and base your investment on market facts.

This is something that you can easily do by analyzing the current trade charts of a cryptocurrency which also helps you make the right type of investment.

Production Cost

One of the ways to become a crypto owner is to start mining cryptocurrencies. If you cannot afford cryptocurrency, you can create your tokens.

Here comes the production cost as a crucial element in deciding crypto prices.

If the production cost of new tokens is higher, then the value of the cryptocurrency will also increase. But this cannot be a uniform case in cryptocurrency since miners would never want to create cryptocurrencies that cost them more than revenue.


Cryptocurrencies operate free from any government or central authority regulations that make them volatile currencies. The value of cryptocurrency can fluctuate at any time due to the lack of any centralization.

But you can turn this crypto volatility your way if you make the right decision.

Carl, on his YouTube channel, The Moon, says, “When Bitcoin is going down, I feel I would not say happy, but I feel comfortable because it is nice to be able to pick up even more Bitcoin and that is the thing if you are bullish on an asset, you find yourself hoping for lower prices instead of higher prices because you can get more of it.”

So, cryptocurrency can be a remarkable investment if you understand it comprehensively before start investing in it.


Cryptocurrency has come a long way and has now become a $1 trillion industry.

Each day, the number of crypto investors is increasing worldwide, thanks to the multiple benefits offered by cryptocurrencies.

You can also become a successful crypto investor by understanding the key factors influencing crypto prices and making smart decisions.

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