In 2009, when Bitcoin was introduced to the public, the whole concept was pretty obscure and 90% of people weren’t sure of what it is all about. The whole situation changed when Bitcoin’s worth reached $5k. That’s when a lot of people got interested in it. Furthermore, we can see that the introduction of countless other cryptos represented a chance for a plethora of people to invest and earn something in the process.
Even though a vast majority of investors don’t really understand the whole concept, it should be said that most of them are comfortable with monitoring only what they consider crucial. Sadly, this is the reason why so many people lost their money to the price fluctuations that are pretty frequent in this world. Not only that, some digital currencies have their own features that are not characteristic of other ones.
The first thing that comes to our mind is the halving of the worth, which occurs every couple of years with Bitcoin. If you would like to see why many experts think that we are living in the period when everyone needs to take this crypto seriously, visit innov8tiv.com. Now, we would like to talk about the factors that have a major say in the price of cryptocurrencies. Stay with us until the end of the article to find more about these.
1. The Adoption
The first thing that we would like to point out is the adoption of cryptos as a legit method of payment. At this point, it can be said that, even though many of them have reached a high level of popularity, they are not as adopted as we would like them to be. Without any doubt, this is one of the main factors that have a say in the price of certain crypto. Naturally, the adoption rate is not as low as it was a couple of years ago, and we can surely expect that it can get higher in the future.
In 2021, the price of BTC has reached a price of $41k for one coin. Surely, this means that the adoption rate has grown significantly in 2020. But, take a look around you and see how many businesses and organizations around you have decided to adopt it. We are pretty sure that this number is not high. Therefore, we can presume that the BTC’s worth will only grow in the future since all the predictions and trends tell that higher adoption can be expected in the next couple of years.
2. Supply and Demand
As is the case with any product in the world, the price of cryptocurrencies is significantly affected by supply and demand. The more people invest in them, the higher their price will get. However, at some moment, when the market stabilizes itself, the price will remain at an appropriate level. For those who are not aware of how the market functions, we would like to say that this is a standard order of things and that expecting something else is a mistake.
We’ve mentioned the fact that the price of BTC has reached new heights in 2021. However, we cannot say that it will remain so high at all times. The main reason why we cannot make these claims is that not all the coins have been mined. According to the statistics we’ve seen, the mining will be finished after there are 21 million coins on the market. After that, it will function as pretty much any market you can take a look at. When we say today’s supply and mean for cryptos, we can say that there’s a bright future for them all.
3. Perceived Value
One of the most important reasons why the price of cryptos fluctuate when compared to fiat currencies is the perceived store value versus the value of fiat currency you are looking at. What is the store value? The best way to describe is to say that is any form of worth that holds its value without too many variations in the process. As you know, the value of fiat currencies depends on the government and the country’s economy.
It’s needless to say that each economy has its good and bad sides. When talking about digital currencies, their store value is widely different than this concept. Instead of being controlled by a government, their worth is more like a worth of gold or any other metal that comes to your mind. Since we are talking about a concept that’s different from fiat currencies, it should be said that investors have a good indicator for their future decision, based on the economic conditions.
4. Regulatory Moves
Governments and official institutions are the fiercest enemies of cryptocurrencies. Not only that, since they represent the top authority in their own countries, there’s no too much space for cryptos. Thankfully, we can see that a high percentage of these institutions have decided to accept the fact that cryptos are the future of the financial world. Naturally, the pace of regulatory moves done for these movements is not as fast as crypto owners would like them to be.
The first country that completely legalized all the cryptos is Belarus. Not only that, every digital currency was made tax-free until 2023. Just imagine if countries like the UK, Russia, China, or the US decide to make regulatory moves to legalize them. The price of these would skyrocket that same day. If we take a closer look at all the trends, chances are that we will see something like this happen much sooner than we think. So, we can expect that the price of digital currencies will be even higher than they are now.
The Bottom Line
Even though the question of cryptos has been present for more than a decade, not all the people interested in this concept are fully aware of all the features and traits. Informing yourself before participation in the market is an absolute must. Here, we’ve provided you with the most important factors that have a say to determine the price of digital currencies.