The crypto markets can move up and down very rapidly without any clear indications in advance
War, conflicts, protests, and recessions are such factors that significantly affect the prices of cryptos
The fear, uncertainty, and doubt among investors initiate the panic selling rallies, pushing the entire market down.
Bitcoin and Ethereum are the pillar cryptocurrencies that make a great investment option if you are looking forward to investing in less risky cryptocurrencies
Assets with ever-fluctuating prices.
The constant change in the prices of crypto assets can intimidate new investors and make them take investment decisions based on impulses rather than solid market movements. The crypto markets can move up and down very rapidly without any clear indications in advance. They can be affected by incidents happening all around the globe.
There could be hundreds of reasons for crypto markets to be down today but in this article, we are going to share a list of factors that contribute to pushing the crypto market down.
If you are someone who has invested your money into cryptocurrencies, this guide will tell you the reasons that can affect the prices of your holdings.
Factors That Reduce the Price of Your Crypto Assets
Here is a detailed list of the factors that can affect the price of your holdings. Knowing the reasons behind the market movements will give you insight into taking the right decision while trading your crypto assets.
The role of macroeconomics: A lot of geo-political activities, such as war, conflicts, protests, and recessions are such factors that significantly affect the prices of commodities on a global level. These reasons also contribute to visible changes in the price of cryptocurrencies.
Demand & Supply: Cryptocurrencies have a supply with a mechanism to maintain their prices, however, sometimes the major holders of the tokens dump all their holdings in the market, increasing the supply and thus decreasing the prices. On the other hand, sudden buying rallies decrease the supply in the market and increase the prices eventually.
Fear, Uncertainty, & Doubt: All commodity markets are driven by sentiments, and cryptocurrency markets, being relatively new, take the biggest toll if the market sentiment turns negative. The fear, uncertainty, and doubt among investors initiate the panic selling rallies, pushing the entire market down.
Crypto Influencers: There are prominent celebrities such as Elon Musk that are particularly interested in cryptocurrencies. When influential personalities talk about cryptocurrencies, it attracts massive traffic toward the crypto assets, and mass movement in the prices can be witnessed.
Apart from the reasons mentioned above, there could be other reasons that can swing the market from one sentiment to the other. From mass security breaches to presidential elections, hundreds of events happening all over the globe could be a trigger point for crypto volatility.
Conclusion
Cryptocurrencies are highly volatile in their prices, however, some of the tokens are much more stable than others. Bitcoin and Ethereum are the pillar cryptocurrencies that make a great investment option if you are looking forward to investing in less risky cryptocurrencies.
All kinds of investments are subject to market risks and thus investors must be aware of what is happening in the industry to overcome the FUD and learn to invest in solid projects only. If you want to learn how you can doge the crypto volatility, click here.
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Also, Read - Four Crypto Experts Discuss the Future of Cryptocurrency
