How are Crypto Prices Formed?
Cryptocurrencies are digital finds that operate online and have no physical form. The use of crypto assets is about the same as fiat, but they are not yet adopted in our everyday life. However, with crypto, you can pay for services and goods in some shops. You can transfer money abroad via crypto to avoid long queues and high fees in banks. You can trade crypto assets or invest in the long term.
What differentiates crypto from real money, except for widespread adoption, is how crypto prices are formed. In this article, we will discuss this and offer convenient services for working with crypto.
What is a Cryptocurrency Exchange?
Crypto exchange is a service where people work with crypto, purchasing, selling, trading, and using different trading tools. Large and credible crypto platforms that operate officially allow the fiat to crypto exchange options, supporting some fiat currencies. So a user can deposit real money (dollars, euros, etc.) to a cryptocurrency exchange and convert them to any crypto asset.
Officially operating crypto platforms such as Binance, WhiteBIT, and Coinbase offer a wide range of trading tools. For example:
- Simple exchange of coins
- Spot markets (offering current market cryptocurrency rate)
- Futures trading options
- And other financial instruments.
What Impacts Cryptocurrency Rate?
Crypto prices are not controlled by the government like fiat money. For example, central banks can issue an additional number of fiat currencies to help the economical state. Crypto emission is laid down at the moment of their release. Some crypto assets have limited emissions, others not. So the first factor that impacts crypto rates is emission. If supply is unlimited, it is difficult to keep prices high. And vice versa, when supply is limited, scarcity increases, thus, the price keeps high.
Another thing that affects crypto rates is the mission and essence of a project that issues those assets. For example, if it is a platform that brings a lot of valuable functions and features to the crypto industry or maybe solves some essential problems, it is valuable and attracts clients and partners. And vice versa, if a project is a meme coin with no particular benefit or mission, it is hard to maintain its value at a high level.
What else can affect crypto prices? Of course, the market trend. It may be upward when prices grow or downward when the market drops.
Read more about factors that impact crypto prices on the WhiteBIT blog.