Cryptocurrency Prices

Cryptocurrencies, stablecoins, altcoins. There are a lot of "coins" and terms sometimes, but we'll help you sort it out.

Let's explain what influences currency prices, where their real value comes from, and where to keep an eye on current exchange rates. All in clear and straightforward terms because crypto is not as much of a science as it may seem.

What influences the prices?

Macro events

The term "macro" refers to the economy on a national and global level. Significant changes and events that affect millions, sometimes billions of people. And some of them can also affect the price of cryptocurrencies.

These can be national or supranational regulations - for example, Europe's MiCA. Global events such as a decline in confidence in the US dollar, or how expensive money is at the moment. Whether investors fear a coming crisis or are intoxicated by the fact that all assets keep rising in value.

Bitcoin's four-year cycle

The world's largest cryptocurrency goes through its cycles, which last for four years. After this time, the so-called halving occurs. During this event, the reward for mining decreases, and the amount of newly created coins decreases.

You can easily see from historical charts that the bitcoin exchange rate fluctuates depending on what part of the cycle the currency is in. For example, it drops noticeably before halving, while it goes up after halving. In the long run, however, it is still trending upward.

Crypto world events

The cryptocurrency industry continues to grow, often making it a world unto itself. A lot of changes are happening within it, which sometimes also affect the prices of cryptocurrencies. Companies are being formed and dissolved, legislation is being addressed, clients are being protected, companies are competing, etc.

Of course, scandals related to the irresponsible management of some crypto companies (the FTX crash) also have a significant impact. There are also anomalies, such as in the case of Elon Musk, who can sometimes pump up the price of his cryptocurrency by 25% in a single day with a single tweet.

Fear and greed

It almost sounds like two of the seven deadly sins. They may be sins, but they're human, so even businessmen can't avoid them.

It is not good to bring emotions into trading. Yet, of course, it does happen. When they see an asset has been rising for days or weeks, many people can't resist and buy immediately. Ideally, as much as possible. That's what's called greed.

But what usually happens after a big rise? Yes, a plummet. Assets fall and fall, and traders get scared. They start to worry that the crash will continue and they will lose everything. So they sell their new assets as quickly as possible - at a significant loss.

Such irrational behaviour only encourages large fluctuations in the asset in question and unnecessarily worsens its overall image and reputation. All the factors mentioned - macro events, the cycle, and fear and greed- are why we always recommend holding bitcoin for the long term.

Why are cryptocurrencies valuable?

Let's start with conventional money, such as banknotes and coins. All of society holds written and unwritten agreements that they have value. The state and the general trust in it provide that.

The value of cryptocurrencies is based on slightly different factors:

1. Limited supply. Some cryptocurrencies, such as Bitcoin, Cardano, Ripple, or Litecoin, have a limited number of coins that can be mined. This limited supply creates much-desired scarcity and can affect their value. (There are other ways to regulate value, such as Ethereum's use of coin burning.)


2. Trust and use. People believe that cryptocurrencies have the potential to become an alternative to traditional money or investments. The more people believe cryptocurrencies can be useful, their price will rise.


3. Technology and innovation. Many cryptocurrencies, including Bitcoin, are based on a unique technology called blockchain. It is a public and indelible ledger of transactions. This technology has the potential to change the way money and transactions work around the world.


4. New opportunities. Cryptocurrencies can bring faster and cheaper international payments or decentralised financial services (DeFi). Such new opportunities may attract people and companies who see great potential in these technologies.


5. Speculation. Some people buy cryptocurrencies hoping their value will rise, allowing them to be sold at a higher price. If there are many speculators, they can cause rapid changes (up and down) in the value of cryptocurrencies.

If we were to summarize, the value of cryptocurrencies is a combination of trust, technology, supply and demand, and the potential for future use. With the technology still in its infancy, the value of cryptocurrencies can sometimes be volatile.

Cryptocurrency price vs. market capitalization

Although they are very different concepts, people sometimes confuse the two. Let’s make that clear once and for all.

The price of a cryptocurrency is the amount for which one unit of that cryptocurrency is traded. One bitcoin, one litecoin, one ether, etc. These are the prices you will find at the top of this page.

The market capitalization, known as the market cap, is calculated from the current price of the cryptocurrency multiplied by the number of coins in circulation. Coins that have not yet been mined are not taken into account!

Example: The market capitalization of a bitcoin was, therefore, $506,569,624,275 (26,025 * 19,464,731).

The future of cryptocurrency exchange rates

When it comes to all cryptocurrencies, it's always a good idea to follow the factors mentioned above in the first paragraph. What's going on in the world, how investors perceive a given cryptocurrency, if there's a development activity, or what cycle it's in.

For example, if you decide to take a risk and invest in meme coins, you also have to consider the high volatility and uncertain future. We, therefore, always recommend that you think through your investment first and do not buy impulsively under the pressure of emotions.