In the crypto space, there are factors that affect the value of cryptocurrencies in the market which causes volatility in the prices of various cryptocurrency assets. Some of the factors that affect the value of cryptocurrencies are;
Utility of cryptocurrencies
Utility is another very important factor that can drive the value of any cryptocurrency up. When there is a big utility and use cases of any particular cryptocurrency, the value tends to increase because there will be a high demand for the cryptocurrency because of the high number of use cases by different users. Binance Coin BNB is a clear example of a coin that has gained huge value over time because of the utility of BNB. Binance has a large ecosystem including the binance smart chain with a lot of projects on the binance smart chain, this has increased the utility of BNB because BNB is used in almost every aspect of the Binance ecosystem like paying for fees, using BNB to buy tokens on BSC, fee reduction on the Binance exchange, using BNB to pay for services on Binance.
High demand of cryptocurrencies
Supply and demand is a major factor that affects the prices of any cryptocurrency asset. When the demand is higher than the supply of a cryptocurrency, the value of the cryptocurrency increases. When a particular cryptocurrency is in high demand, there is a greater chance for the value to increase over time.
Low Supply of cryptocurrencies
Low supply is a big factor that affects the value of any cryptocurrency. Supply and demand are key economic factors that determine whether the value of any cryptocurrency would increase or decrease. For example coins with a very low supply tend to have high value over time than coins with an unlimited supply. In the cryptocurrency market, a good cryptocurrency project with a max supply of 20,000 coins would most likely have a higher value than a cryptocurrency project with a max supply of 200 trillion coins or with infinite supply.
Both positive and negative news involving the team behind the cryptocurrency project
This is a huge factor that affects the value of any cryptocurrency. When there is positive news involving the team behind the cryptocurrency project, people tend to FOMO in which can increase the value of the cryptocurrency. Also, when there is negative news or scandal involving the team behind the cryptocurrency project, it causes FUD which can cause the value of the cryptocurrency to decrease.
Sentiments and social media influencers’ tweets
Sentiments in the market and social media influencers’ tweets can have a major impact on the value of any cryptocurrency. When the sentiments in the market is on the positive side, it tends to increase FOMO which increases the demand for the cryptocurrency and also the value of the cryptocurrency. Also, tweeter has proven to be the home for crypto as almost all the news, reports and comments surrounding crypto, circulate on Twitter. Influencers who have a large following on Twitter can massively influence the value of any cryptocurrency with a single tweet. We have seen the effect of Elon Musk tweets on the market. Dogecoin and Bitcoin are two cryptocurrencies that have taken a swing from Elon Musk tweets.
Regulation
Regulation is also a big factor that affects the value of any cryptocurrency. We have seen so far the impact regulations from big financial countries like USA and China can have on the value of cryptocurrency. When there is a regulation that is negative, the value of the cryptocurrency assets tend to be affected as well and can cause a decrease in the value of cryptocurrencies.
Listing on top exchanges
This is one of the biggest factors that can increase the value of any cryptocurrency. Binance and coinbase listing is very powerful when it comes to increasing the value of any cryptocurrency. When a cryptocurrency is listed on top exchanges like Binance, Coinbase, there is a huge chance that the value of that cryptocurrency would increase as it would create a high demand and exposure for the cryptocurrency.
