Key Factors Influencing Cryptocurrency Value

6th December 2022

Cryptocurrency value variation in the market is not hidden. Crypto goes up and down as per the higher and lesser demand the cryptocurrency in the market. But the question is, is only the demand factor responsible for this variation? Many factors influence the value of cryptocurrency. Therefore, variation in cryptocurrency decides the crypto users in the market also. Whether the prices going high or low, crypto users should go through the important facts listed below for making their final decision while investing in digital currency and factors influencing the cryptocurrency value should be kept in mind.  Let’s discuss the factors affecting the prices of cryptocurrency in the market. If you trade, this HomePage is essential because it can facilitate you in trading bitcoin.

Counting of Nodes:

Cryptocurrency can be estimated with several node counts indicating the number of wallets that exist in the same network. Google suffering and any currency website can help it to find out the currently active nodes or wallets existing in crypto. The number of persons highly recommended for the cryptocurrency, clearly indicates the number of nodes count is increasing. Hence the value of that cryptocurrency is increasing which leads to strong financial improvement in the market.

Production Cost:

Another factor that influences the value of crypto assets is their production cost. Higher requirements of new tokens and to verify their network transactions, the necessity of specialized hardware and servers are highly recommended. For this miners have to pay a network fee for using virtual tokens. This makes the cryptocurrency in use by the crypto users and makes it decentralized. Therefore, as the mining cost is increasing, the crypto value also increases. In the deed of making a profit, miners invest their resources in the mining of cryptocurrency tokens. However, the crypto value may remain the same all the time. So before mining one should research before committing the same and investing in any particular cryptocurrency.

Crypto Exchanges:

As the number of users purchasing and selling tokens is increasing day by day, a large number of tokens are required for crypto exchange in the market. A transaction fee is also compulsory in case you need to swap your currency in two or more exchanges to enhance the investment cost.

Competition

Anything new in the market has to compete with its opponents. Market rates vary according to the tokens regarding cryptocurrency introduced. Most acceptable cryptocurrency projects among different coins such as soccer team coins, celebrity coins and many more are viable which overcome the limitations coming along and hence build a strong network for the crypto users.

Government Regulation

Some government institutions do not prefer the use of cryptocurrency due to its decentralized nature and irregular ups and down in market value. Therefore, in other ways, the crypto market can be controlled. The first one is pay tax: tax should be payable on the exchange of crypto into coins. That would be applicable for some specific tokens so that people can prefer their cash-out coins to make a profit. Another way is to ban cryptocurrency. But unfortunately, if any country makes regulations against cryptocurrency, then it will negatively impact its value.

Nevertheless, a few countries, such as Japan are coming into force with blockchain technology and making it the national currency so that people can buy virtual tokens to give a hike in crypto exchange businesses.

Scarcity:

Practically it can be estimated that with a limited supply of crypto, the prices will go higher as the number of coins will be limited in the count. However, 40% of the coins will be in use and the remaining 60% will have to be reserved as their value may drop with the increasing availability of coins for buyers. Some agencies place the coins in unidentified places in the blockchain so that the actual count of the coins may remain reserved which leads to control of the supply of available coins.

Social Media

Social media had a great impact in view of cryptocurrency value in market. The variations in the market value of crypto influence social media users. A person named Elon Musk while talk about the Doge currency and it’s value, it create an image about this particular currency in market.  Hence social media users realise the value of the DOGE coin and automatically its value reaches high.