The price of crypto is one of the first factors that is considered before traders dive into buying and selling activity of any given crypto token. Of course, there are other indicators that also make up the right trading decision, but it is the price that governs them all. Cryptocurrency is a highly volatile asset class, and understanding the price movements can be challenging.
In this guide, we dive into an introduction to cryptocurrency prices, discuss how they are determined, and share tips on evaluating the market to help ensure that you make informed decisions when investing in digital assets.
What Are the Biggest Determinants of Cryptocurrency Prices?
Cryptocurrency prices are determined by the quickly-evolving market forces of supply and demand. This means that the price of a particular cryptocurrency will rise or fall depending on market conditions. The price of any crypto asset is also highly influenced by news and announcements from the broader industry, such as the launch of new technologies or partnerships.
In addition to direct market forces, there are also factors such as speculation, regulations, and investor sentiment that may also affect the price of a cryptocurrency.
The total market cap can also be used as a way to measure the overall health of a particular cryptocurrency. The larger the market cap, the more liquid a coin is, and in turn, may be seen as having more value. It also means that there is more total money invested in the asset.
Fiat Price vs Crypto Price – Key Differences
Fiat price typically stays constant as a numerical value. Although the purchasing power of fiat currencies can change with time due to inflation, the numerical value will remain the same. On the other hand, cryptocurrency prices are much more volatile and can fluctuate very quickly due to their decentralized nature.
Cryptocurrency prices are also denominated in fiat terms. For example, the price of Bitcoin in fiat terms is just under $21,000 as of the time of writing. This is measured in U.S. dollars in most markets. However, one Bitcoin will always be worth one Bitcoin. Price is determined by perception and the unit of account.
So, the main difference is that cryptocurrency prices fluctuate while fiat currencies stay the same in numerical value. However, if the unit of account is crypto, then fiat currency prices can be seen as getting cheaper due to inflation (losing purchasing power).
Why Is the Crypto Price so Volatile?
Crypto prices are known for being volatile because of the decentralized nature of the market. There is no centralized authority to regulate or set prices, meaning that it is entirely up to the market forces of supply and demand to determine prices.
The decentralized nature of the market also means that there can be more extreme swings in prices due to news, market sentiment, and other external factors. When a massive influx of money enters the market, prices can rise quickly as demand increases. On the other hand, when bad news or a market crash occurs, prices can also fall quickly as people begin to sell off their positions.
In addition, the majority of cryptocurrency trading takes place on unregulated exchanges, which can further increase volatility due to a lack of liquidity and oversight. Overleveraged liquidations can cause a cascading effect, leading to rapid price swings.
Finally, as a new industry, the market is finding its feet and there can be a lot of speculation in the sector, leading to greater price volatility. As a polarizing asset class, cryptocurrency prices can be subject to media hype and speculation.
Tools to Check the Crypto Price Today
If you are searching for the real-time crypto price, make sure to check out this intuitive data page on Gate.io. It shows the prices for a variety of major cryptocurrencies, updated in real-time. By using this tool, you can easily track the prices of any crypto asset and quickly identify trends in the market.
Currency BTC and ETH Price and Predictions for 2023
With the current bitcoin price hovering at around $23,000, you might be wondering if now would be a good time to get in or wait for later. Well, predicting the future price of bitcoin is no easy task, as many factors can influence its value.
In general, it is expected that the price of BTC and ETH will continue to increase over the next few years. There are several reasons for this, including increased demand from institutional investors and the growing adoption of the technology.
With the having (an event where the supply of newly mined BTC is reduced by 50%) approaching in 2024, getting in before this supply shock could prove beneficial. If you are looking to convert USDT into Bitcoin (BTC price), Gate.io Exchange is the perfect platform to do it.
As for Ethereum, it has been growing steadily in terms of usage and adoption. Ethereum protocol continues to improve, and so too is its value. It is expected that by 2023, Ethereum should progress with its technology, resulting in a bullish market. The ETH price is currently around $1500. However, by the time you read this, the price could be higher or lower. This real-time ETH price indicator should be looked at for more accurate information.
Final Thoughts
It is always important to do your own research when trading crypto assets and never put in more than you are willing to lose. Also, be aware of any regulations or restrictions in your country when it comes to investing in cryptocurrency.
That being said, educating yourself on the forces that move the markets can prove to be lucrative and fulfilling. Gate.io is the perfect place to start with up-to-date crypto prices, market analysis tools, and comprehensive guides, you will always have just the right data at your fingertips.
