Are you looking for where to learn about cryptocurrency value and how to determine cryptocurrency value, know which cryptocurrency will skyrocket, and calculate the price prediction? Then this article is for you?
How to Determine Cryptocurrency Value
Cryptocurrency is a virtual or digital coin built on a blockchain technology that exists solely online; it has no physical form nor regulating authority and transactions are verified, and records are secured by cryptography, making it nearly impossible to counterfeit.
Cryptocurrency value is determined by demand and supply, just like anything else people need or want.
If demand is greater than supply, the price will skyrocket. For example, if there is no rainfall for an extended period (drought), the price of grain and produce will increase if demand doesn’t change. Crypto gains value when demand is greater or higher than supply.
Things that Cause Cryptocurrency to Rise and Fall
Cryptocurrency demand and supply
Cryptocurrency gains value when demand increases more than supply. The supply mechanism of crypto is always known; each cryptocurrency publishes its token burning plans and minting.
Some cryptos have mechanisms that “burn” existing tokens to slow inflation and prevent the circulating supply from growing too large.
Token burning means sending them to an unrecoverable address on the blockchain.
Demand can increase as utility increases or a project gains awareness. Wider adoption of crypto as an investment also increases demand while effectively limiting the circulating supply.
The method by which cryptocurrency founders plan on gaining dominance in the crypto market could determine if people will still want to buy into the project; if there are too many competitors, it will decrease the chances of the crypto gaining widespread adoption.
Evaluate a project’s competitive strength in the market by knowing how many competitors the chosen crypto is up against and its technique to stay competitive in the crypto market.
If the project doesn’t level up to its competitors, it will negatively affect the cryptocurrency price.
Historical events and protocol upgrade.
Historical events and upcoming protocol upgrades are among the factors that can make the price of a coin rise and fall.
Suppose the currency is tipped to receive a major upgrade that will bring in better features such as support across multiple markets and enhanced efficiency. Investors will be pleased to purchase the currency, thus causing its price to rise.
However, suppose the upcoming protocol upgrades do not seem like one that will promote the widespread adoption of the token.
In that case, investors will be forced to sell the currency across various exchanges, and as such, causing its price to drop by a large margin.
Market Events and General news.
This is the most influential factor that causes cryptocurrency prices to rise and fall. It does not matter how perfect the token supply and crypto fundamentals are; its value will be determined by market events and industry news.
How do Cryptocurrencies Lose Value?
The value of cryptocurrency is determined by the demand and supply, just like anything people want. If the supply exceeds the demand, the price will plummet, and the cryptocurrency will lose its value.
How to know which Cryptocurrency will go up
Increase in Transactions Volume
The first thing to know is the reason why a certain coin’s price is rising. The more people buy a currency, the more the price rises if the number of buyers is more than the number of sellers.
Sometimes the hype is created around the increase in the demand for the coin. The generated publicity will invite even more people to join the trade of the particular coin, especially because of the fear of missing out.
The more people get to know about a coin, and they get involved, the more the transaction volume increases, meaning more people are selling and buying the coin than before.
Something positive in The News
The positive news is always a reason for an increase to follow. Many times positive news is just anticipated, and this can also create hype and drive the price to pump even weeks before the listing happens.
After crypto rises suddenly, then has a steady decline, and another cycle of this type repeats, there is a chance that a higher rise is coming, which will also have a more significant pullback. Still, this time you are in for a more significant profit.
After each consecutive rise of a coin, there is always a pullback; this is normal because it is part of the coin’s consolidation process.
It cannot pump forever, and there have to be pullbacks after each pump, as they are good for the coin’s stability.
How to Calculate Crypto Price Prediction.
The Market Cap of crypto is calculated by multiplying the Circulating Supply with the price of the token or coin (market cap= Circulating Supply * Price)
Cryptocurrency value is determined by demand and supply, just like anything else that people need or want. If demand is greater than supply, the price will skyrocket.
The method by which cryptocurrency inventors plan on gaining dominance in the crypto market could determine if people will still want to buy into the project or not.
Crypto gains value when demand is greater or higher than supply.
Watch the video below to know how to determine cryptocurrency value: