For more than a decade, cryptocurrencies have been a great way to invest money in your future and generate additional income that will provide you with a more secure future. It is difficult to say exactly how much cryptocurrency there is, but we can say that there are thousands of different ones, of which bitcoin is the most popular. What all currencies have in common is that it is digital money that, although it does not have a printed form, has its value. Moreover, cryptocurrencies are increasingly becoming a means of paying for many services – flight tickets, luxury vacations, tuition, and so on. When we talk about investments, cryptocurrencies are most often traded, although many enter stocks, but also engage in mining. Whichever you choose, the chances are high that you will earn a considerable amount on them. Of course, this will require effort and time, especially if you decide to mine.
We know that the value of cryptocurrencies is variable and changes daily, and often several times during the day. But do you know what factors affect the price of cryptocurrencies?
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1. Financial openness
Research has been conducted to analyze the impact of inflation, financial openness, and the prevalence of the Internet on the price of cryptocurrencies. It turned out that, of these three factors, only financial openness shows signs of marginal impact with trade volume.
2. Perceived value
The warehouse of cryptocurrency values can be compared to precious metals, because it has a fixed amount, at least when it comes to bitcoin and certain currencies.
3. The price of crude oil
In March, we had a 30% drop in the oil reference value, which proved to be the lowest level in the last four years. This is also the period when, within 24 hours, the value of bitcoin fell by more than 10%.
4. User adoption
The adoption of funds by users can affect the price of digital currencies. By this we mean that the popularity of a currency affects its very value – the more the currency is in demand, the higher its value and vice versa.
More and more small companies, even stores, are accepting bitcoin as a means of payment. It is estimated that if the popularity of cryptocurrencies continues to expand in this direction and lead to their use as traditional currencies, the value would continue to grow, in which case this money would play a significant role in strategic reserves and become a model of asset allocation worldwide.
5. Cryptocurrency regulations and Government involvement
A country’s regulations on cryptocurrencies can significantly affect the value itself. With its growing popularity, the government and regulators have begun to pay more attention to the industry, as well as to monitor transactions, as it has been observed that cryptocurrencies are often used to finance terrorism, money laundering, and other criminal activities. Therefore, companies that use virtual currencies are required to register with the Federal Financial Intelligence Unit.
6. Strengthening competition
We have already mentioned thousands of different cryptocurrencies. To find its place under the sun, the currency must stand out for something, to be different from the rest. Bitcoin has long fought for its place, and expensive transaction costs can significantly slow down many cryptocurrencies, although many new ways of applying blockchain technology are being found that are effective in solving this problem.
Three years ago, the Internal Revenue Administration announced that cryptocurrencies should be taxed because they are considered assets. The outcomes were mixed but led to the conclusion that cryptocurrency estimates benefit from public recognition, that is, as part of official assets. While some think so, others argue that it is only a step closer to conducting regulatory oversight.
So far, we have heard that investing in cryptocurrencies carries with it a lot of risk of hacker attacks. This is also the reason that affects price volatility because investors are in constant fear. Cryptocurrencies are very vulnerable to hacker attacks because they are protected only by the mechanism of digital encryption. This is also the reason why digital money can be considered unreliable for investment, which you can read more about at reliablecounter.com.
How to protect cryptocurrencies?
To make sure your digital money doesn’t disappear overnight, it’s important to take a few important steps to prevent it. The first and most important thing is choosing a safe wallet. Here you choose between two types – hot and cold wallet. A hot wallet carries more risk with it, as it requires internet access, and thus becomes an easy target for hacker attacks. In addition to that, we also have a desktop version that is not much safer. On the other hand, we have a cold wallet – hardware software, which is a great investment, but also the certainty that your money will be protected.
Many fake platforms are there just to take your money. Therefore, it is always necessary to do a little research before embarking on an adventure called investment.
How to increase your chances of earning?
To increase their chances of making money, investors resort to various methods and techniques. While some spend day and night in front of the screen, following the situation on the market, others prefer to invest in one of the software applications that will do all the work for them. All this is possible thanks to artificial intelligence that can recognize changes in the market 0.03 seconds before the fastest investor, and in this case, it is more than enough to provide you with earnings.
Also, many choose to invest all their money in more, usually smaller currencies, so they do not expect large losses if the value of an individual falls.
Before investing, it is necessary to do research and get better acquainted with cryptocurrencies, as well as consider all the factors that may affect its value, as well as reliability. You also need to think about how to invest, that is, whether you prefer trading or mining, which may be more profitable, but you will need much more time to get there. You will further increase your chances of earning money by joining a mining pool.