What determines the Bitcoin exchange rate? What makes the course of the most famous cryptocurrencies either soar to incredible heights, then fall down from them.
Does it make sense to invest in these virtual currencies when they are in decline? Let's try to find answers to all these and some other questions.
What determines the price of any cryptocurrency?
The cost of cryptocoins is regulated solely by the presence or absence of demand for them. They are not tied to any of the currently existing fiduciary currencies in the world, or any other assets. For the value of Bitcoin to rise, like any other cryptocurrency, it must be bought. The price of one coin and the number of people buying it are directly proportional. That is, an increase in the number of purchases provokes an increase in this indicator. And, accordingly, vice versa.
What factors can influence the value of a cryptocurrency?
Spoiler: There are several of them. But their influence is not predictable
First, the position of virtual money is strengthening in the real world. In Japan, a law has been passed that recognizes the right of cryptocurrency to full use as a settlement option. And this immediately positively affected the value of Bitcoins. But as soon as the Chinese government banned these products, this figure began to decline.
Secondly, according to experts, the pricing of small cryptocurrencies is greatly influenced by the so-called "public opinion". Let us recall, for example, this summer, when the Ethereum rate collapsed within one night. And the reason for this was an ordinary fake that the creator of this currency, Vitalik Buterin, died. And it was enough to appear in the networks of refutation to restore the course.
Thirdly, traders are beginning to transfer money from classic Bitcoin to its "daughters", which have become independent currencies - Bitcoin Cash and Bitcoin Gold. This, and the cancellation of SegWit2x, increased the value of Bitcoin Cash by 40%.
Does it make sense to buy a cryptocurrency at the time of its decline?
Cryptocurrencies have always been considered a highly profitable investment of money, but it is also the most risky way. No self-respecting expert can speak with confidence about how the course of virtual money will behave. Nobody even dares to name the top bar.
Let's remember 2014. Bitcoin's price drops from $ 1000 to $ 100. And immediately there were statements that this price level is real for this virtual currency. Others objected to them, claiming that this figure was significantly overestimated. But there were also those who predicted a return to the price Olympus. As a result, everyone was wrong.
It doesn't matter what price you buy Bitcoin at today. You just need to understand that tomorrow you are equally likely to become both fabulously rich and completely poor. Therefore, it is necessary to weigh the pros and cons of how to decide on the contribution of money to such a risky venture.
The Topic of Article: Why it is impossible to predict the rate of cryptocurrencies.