Atfter knowing the three previous factors affecting cryptocurrency market movements, let’s continue our discussion about the next three.
Check Out 6 Factors Affecting Cryptocurrency Market Movements:
Development of Blockchain Technology
According to CNBC, a cryptocurrency refers to a digital coin that runs on a blockchain. You should remember that blockchain technology is not a ready-made technology. It is still in a process of continuous and open-source development. This is the culprit behind the extreme crypto market volatility. The development of new technology can have both good and bad effects on the crypto market. Besides, these impacts are very difficult to predict from the start.
Just look at the price of cryptocurrencies when there is news of hard-fork, lightning network implementation, and so on. Every time the initial news appears, the price will waver. Sometime after the change is applied, prices can fall dramatically or soar rapidly.
Thus, the development of blockchain technology will continue to influence the crypto market, especially if there are innovations that can solve the scalability problem.
Like other financial markets, market sentiments also affect the cryptocurrency market movements, such as panic, uncertainty, and euphoria. Market sentiment has a more extreme impact on the crypto market than on the forex or gold market because many people control the ownership of cryptocurrencies. For example, an investor who owns a large number of bitcoin suddenly sells his portfolio because he doubts his future, so the crypto market can immediately collapse.
Until now, countries around the world have not reached a unanimous agreement on the regulation of cryptocurrencies. Efforts to homogenize regulations have not yet produced results.
Finally, some countries allow the use of crypto as a currency, some countries call crypto illegal, some countries only recognize it as an investment asset and tax object, and so forth. Furthermore, the government can change the regulation in the future according to the desires of the respective governments.
For the crypto market, the perception of regulatory recognition for digital currencies has the potential to drive price increases massively.
Conversely, if there are countries that declare restrictions or restrictions on the manufacture and trade of crypto, it will harm the crypto market.
In conclusion, if you understand those factors affecting cryptocurrency market movements, you will be able to gain maximum profits. Good luck, traders!