The values of cryptocurrencies are more volatile than the prices of traditional currencies. That’s all the more reason to pay attention to the trends on the market, especially when it comes to very large investments. What do the quotes for digital currencies depend on and what type of information to take into account?
What impacts the cryptocurrency quotes and prices?
Cryptocurrencies are usually converted to USD, although they may as well be quoted in any other currency (including digital ones). Both the quotation and the market capitalization are displayed for a particular day, as the prices of cryptocurrencies change at a rapid pace. There are plenty of factors impacting such state of things, the most significant one among them being the law of supply and demand. The more people willing to use digital currencies, the bigger their chances of conquering the financial market. That’s why such a huge role is played by promotion in the media, supported by famous, renowned individuals.
Cryptocurrencies show lower sensitivity to the macroeconomic factors, which is quite an advantage. That’s because it allows them to be used as an alternative investment that would compensate the potential losses suffered on the traditional market, which is more vulnerable to the influence of macroeconomic factors. The investors, when putting their stocks and bonds in cryptocurrencies, raise their prices and thus contribute to the development of individual cryptocurrency systems.
Cryptocurrency quotes online
Digital currencies are means of payment that operate within closed systems. All changes to the standards of these systems might (but don’t have to) influence the value of cryptocurrencies. It is similar to the Media reports about a particular cryptocurrency being used by some country or a large institution. In such case, the prices of cryptocurrencies generally go up, and the network of users grows at a faster pace. It doesn’t necessarily have to be information about the country or institution deciding to use a particular cryptocurrency – all it takes is for them to use the technology it is based on. Such news usually appear unexpectedly and result in a huge increase in the prices of cryptocurrencies.
Large price fluctuations are one of the biggest flaws of decentralized cryptocurrency systems. The investments are riddled with high risk, and during payments users encounter the so-called Currency cross, which is a situation where a currency pair is built based on two different pairs. In such case we’re obviously dealing with the macroeconomic factors influencing the development of the exchange rate. A global drop in the value of USD might therefore result in an increase of the Bitcoin exchange rate.
Cryptocurrency quotes and the mining costs
Cryptocurrencies are decentralized systems without any oversight from any third party institution. There is no central entity responsible for their issue.
They have to come from somewhere, though.
That’s why they are mined out of the system’s resources. We have already covered the details of this process somewhere else, so we’ll just mention it here that digital currency mining is done by “miners” using advanced computer equipment. The system was constructed in a way that makes it more and More difficult as the time goes by. And the cost of mining cryptocurrencies has a direct impact on their price.
Cryptocurrency quotes and legal regulations
The prices of cryptocurrencies also depend on whether they are subject to legal regulations on the territory of a particular country. The regulations and requirements implemented by state governments on using cryptocurrencies may either raise the prices of cryptocurrencies or lower them. If these are regulations of a repressive nature, it will certainly not result in stimulating the market. If, however, they are favorable to development of decentralized payment systems, the prices of cryptocurrencies will most likely increase.
Cryptocurrency prices and the media
The media plays a very important role in promoting cryptocurrency systems. Depending on what light they put a particular currency in, it might gain or lose in value. Media reports are one of the main factors influencing the decisions of investors, especially of the less experienced ones who take everything written in newspapers and on web portals at face value. We have already explained how treacherous such reports can be in a different article.
Suffice to say, the predictions made by journalists – regardless of how educated and astute they are in their analyses – don’t always come true. It remains a fact, however, that the media holds a huge power in this area and makes a real impact on the prices of cryptocurrencies. Not to mention it’s not just about catchy news, but also about educational materials that make it possible for unfamiliar people to learn something about cryptocurrencies. Materials of this type influence the public opinion and contribute to increase in popularity of cryptocurrencies.
Cryptocurrency quotes and financial crises
The prices of cryptocurrencies depend to no lesser extent on the Economic situation. When the traditional financial system starts to shake, people desperately start looking for other types of assets. Cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), Ethereum Classic (ETC), Bitcoin Cash (BCH), Ripple (XRP) or Stellar (XLM) make a more effective form of securing the capital than the regular money, which is vulnerable to inflation. The correlation between crises of the traditional financial system and the exchange rates of digital currencies is therefore evident: the more players, the higher the market capitalization.
Where to invest in cryptocurrencies?
Investments only make sense when we follow the cryptocurrency quotes on an ongoing basis, 7 days a week. It is important to respond fast to the Fluctuations in the exchange rates, which might change within just a few hours. The Bitmarket exchanges generate revenue in the amount of about 2.5 million USD. We can trade cryptocurrencies on each of them – exchange them for traditional money and the other way round. Pretty significant successes are also shared by the X-Trade Brokers brokerage house, which has launched five new cryptocurrencies on the market. If you want to stay up to date with the exchange rates, you can also use such services as CoinMarketCap: you will find useful information and real-time charts there, updated 24h a day. All the data is presented in an accessible form: name, acronym, turnover etc.
Is it safe?
That depends on what you mean by “safe”. Cryptocurrency systems are equipped with numerous security measures that provide transactions with Elementary protection. They are based on the blockchain technology, which rules out the possibility of transaction duplication or other errors that could constitute a potential threat to the users’ possessions. Every user has a continuous access to a ledger with all the transactions executed within the system.
Aside from the matters related to IT, however, one has to admit that from a purely financial point of view, investing in cryptocurrencies might be risky. Plenty of countries don’t recognize them as a legitimate and widely accepted medium of exchange. Due to their decentralized nature, they aren’t subject to oversight from any institution, either. On one hand, it yields certain benefits, on the other – it generates risks that are alien to the traditional money. Some of the government institutions downright warn against using cryptocurrencies, pointing to the absence of any guarantees whatsoever as well as the possibility of cyber attacks. Another no less important circumstance is the large fluctuations in exchange rates.
Regardless of all these downsides, however, using digital currencies is not against the law (at least not in most countries). According to certain experts, the blockchain technology that the cryptocurrency systems are based on may in the future find applications in the traditional financial circulation. There’s a constantly Growing number of countries that implement legal regulations that are friendly to digital currencies. In some countries cryptocurrencies have already become an official legal tender. A growing number of stores, banks and service facilities accepts payments executed using Bitcoin (BTC), Ethereum (ETH), Ethereum Classic (ETC), XML, Binance Coin (BNB), Tron (TRX), Neo Coin (NEO), Basic Attention Token (BAT), Bitcoin Gold (BTG), EOS, Qtum, Bitcoin Cash (BCH), Crypto.com (CRO), Waves, BAND, Dash (DSH), Litecoin (LTC), Libra Coin (LIBRA) and other cryptocurrency systems.
Cryptocurrency prices: what does a chart show?
The cryptocurrency exchange rates are displayed on charts that might feel pretty enigmatic to inexperienced people. They have some lines, zigzags or labels that represent the current market tendencies in visual form. Let’s start with the concept of a trend, which is crucial in a technical analysis of a chart.
A trend is another word for the course taken by particular events or the dominating tendency of events. Rising zigzags are characteristic to an increasing market. Peaks and lower edges of individual lines are placed higher than in the preceding ones. Which is the exact opposite of a declining market – where the peaks and lower edges are below them. When we’re not dealing with any of these two eventualities, we’re talking about a sideways trend. An upward trend only occurs when it’s possible to connect a line from the right to the left for at least two lower edges – and obviously when the second peak is higher than the first. When it comes to a downward trend, as you might guess, it’s the opposite – the second peak is lower.
Cryptocurrency exchange rates: what is a volume?
A volume is another word for the exchange turnover, or in other words: the amount of assets sold or bought within a specific period of time. It is represented in form of a bar chart. The turnover constitutes a measure of intensity or a degree of importance of exchange movements. For example, if the market is growing on a poor volume, one could expect quick returns to the previous prices. It is similar when it comes to downward tendencies.
In order to maintain the direction of market development, a high volume is required that will grow towards the trend and fall during adjustments. That’s the only pattern indicating a proper market development that encourages investors to place their capital in its assets. An exchange turnover makes a significant element in analyzing price developments. Using the CoinMarketCap charts as an example, you can easily follow the exchange movements for a particular currency.
How to buy a cryptocurrency?
Purchasing major cryptocurrencies, such as Bitcoin (BTC), Ripple (XRP), Waves or Huobi Token is not a problem at all. You can buy them at online exchanges, for examples. A good website, on top of sales offers, also features useful information on how the market functions, charts, exchange rates, databases. Such websites are worth using to know such things, among others, as what the capitalization is – one of the key concepts that every investor and cryptocurrency user should learn. You can find an article on our website that covers this topic more broadly.
Buying digital currencies at exchanges is nothing complicated. It is fast and hassle-free – you don’t need to wait long hours for a transfer to go through. It is the best to pick a website that doesn’t require verifying personal data – that way we can save a lot of time (not to mention not everyone wants to disclose their data). Cryptocurrencies can also be purchased through cryptocurrency exchange agents. As the popularity of Bitcoin and other digital currencies grows, there’s more and more of them.
The prices of cryptocurrencies are also called exchange rates, which obviously need to be looked up before the purchase. It’s a good idea to follow the charts on an ongoing basis in order to be able to Choose the most attractive offer. Purchasing digital currencies through an exchange agent requires providing the basic personal data, as well as an e-mail address.
One more thing: the name of a cryptocurrency should not be a criterion that is taken into account when investing (although some names are better than others).
Purchasing a cryptocurrency with vouchers
One alternative to exchanges and agents are vouchers – a perfect gift for friends and family. Not all digital currencies can be purchased using vouchers, but the major ones can. In order to use a voucher, we need to enter the numerical code assigned to it in the right place on the website. After such operation, the online wallet will be credited with funds equivalent to the voucher’s price. We can credit any cryptocurrency wallet that way – all we need is to know its public address.
Cryptocurrency exchange rates: which offer to choose?
Out of the different available options you should choose one that will be the most suitable for you. Exchanges are more for people who are already somewhat familiar with the cryptocurrency market, with what the market capitalization is, how the price of a digital currency develops etc. The less experienced users should rather stick to exchange agents – especially since there are more of them than exchanges. The Bitbay.net website, for example, has an interesting, extensive offer. Or Binance.com. One of the pretty popular choices is Coindeal.com – a website that updates the exchange rates 24h a day, 7 days a week.
Vouchers are a great idea for a gift. The prices for individual vouchers might differ, and a lot, that’s why it is better to browse through the offers of different services before the purchase and pick the best one. If you’re just starting your adventure with cryptocurrencies, don’t begin by investing too high amounts. Digital currencies are governed by different rules than the traditional ones, their prices are volatile, and the chart won’t always be gentle on you – you have to get prepared for that.
The cryptocurrency exchange rates is a topic that needs to be discussed more broadly. In this article, we focused on the most basic issues related to the development of the prices of Bitcoin and other digital currencies. The factors that decide on upward or downward exchange rates are diverse and specific. The exchange rate of a traditional currency develops differently, influenced by different mechanisms that we may write about later.
Generally speaking, the traditional financial circulation seems more stable, as it is of a centralized nature and subject to oversight from different institutions. On the cryptocurrency market, there might be such drastic changes within just a few hours that an investment that seemed profitable before will turn out to be a misguided choice. Every cryptocurrency based on the blockchain technology is subject to significant price fluctuations and it is something that has to be accepted.