There are many factors that influence cryptocurrency pricing. Supply and demand are the main factors, but the media also plays a large role in driving price up and down. For example, negative press can cause the price of a cryptocurrency to dip, while positive publicity can increase it. The following are some of the factors that influence cryptocurrency pricing. Keep reading to find out more. Also, check out our article on how the media affects cryptocurrency prices. You will be able to make the most informed decisions about cryptocurrency pricing.
Price fluctuation
The fluctuation in the price of cryptocurrencies is a well-known phenomenon in the cryptocurrency market. Compared to the stock market, the volatility of cryptocurrency is much higher. Despite the fact that there are no fixed rules that govern the cryptocurrency market, research is still conducted to find out how the cryptocurrency market works. This research focuses on articles that discuss how the market is regulated. Unlike traditional stock markets, cryptocurrencies have global exchanges, making it possible to trade with them from any location.
There have been many studies conducted on factors affecting the cryptocurrency price. Prior studies have shown that public information affects cryptocurrency prices. However, privileged information is difficult to measure and does not evenly distribute to investors. Nevertheless, it is impossible to ignore the impact of such information on the price in any market. For this reason, the study seeks to identify the factors that contribute to the cryptocurrency price volatility. The study aims to determine whether privileged information is responsible for the high volatility in the price of cryptocurrency.
Influence of public sentiment
One study has shown that the influence of public sentiment on cryptocurrency pricing has a surprisingly strong correlation. Using four different indicators, Corbet et al. calculated a sentiment index based on news stories that were published after four different macroeconomic indicators. The results indicate that positive news immediately after macroeconomic indicators decreases the value of Bitcoin, while negative news around macroeconomic indicators increases its value. However, news about GDP and CPI have no statistically significant relation to Bitcoin prices. A second study examined dynamic relationships between social media and Bitcoin performance, considering different user groups and platforms as well as their post volumes.
While the correlation between Twitter sentiment and Bitcoin price is weak, the study suggests that investors may have been adopting the same strategy in the Bitcoin market. As the volume of cryptocurrency trading has increased, high-frequency trading firms may have seized the opportunity to profit from it. As the research in this area continues, it may prove to be a valuable resource for investors. Even if the correlation is weak, this study demonstrates that public sentiment is useful for predicting cryptocurrency prices.
Production costs
A recent investigation by Fortune features reveals that the bitcoin price is approaching its production cost, which is less than $35k. As the price of Bitcoin continues to fall, this will likely cause many miners to scale back production. While this could be good news for miners, it will also mean that energy costs continue to eat into their profits. Bitcoin miners are already scaling back production in response to the current market conditions. The price of bitcoin could go as low as $9,600, or as high as $16,000, depending on the circumstances.
The costs of Bitcoin production are a combination of fixed costs associated with infrastructure, such as electricity, and indirect costs associated with the algorithm. Mining involves a network of computers that compete to solve a mathematical algorithm. The miner who solves the equation first wins newly minted bitcoins, as well as transaction fees. This indirect cost depends on the difficulty level of the algorithm used to generate bitcoins, which in turn affects the production rate, overall supply, and price.
Exchange availability
A good place to start is to check CoinMarketCap, a website that tracks the price of various cryptocurrencies. It tracks trade volumes on hundreds of different exchanges. If you’re looking to buy a cryptocurrency, the top exchanges by trade volume include Binance, Coinbase, and Huobi. Note that not all exchanges offer all types of cryptocurrencies. Most of the popular coins are available on most exchanges, but you may have to look around a little to find the newest coins or small market caps.