INSUBCONTINENT EXCLUSIVE:
As usability of a coin increases, its demand rises, which, in turn, increases the coin's valueCryptocurrency is the new craze for retailers
But one factor about digital currencies always worries investors — volatility
Cryptocurrencies have witnessed massive hikes and drops in value, and that can push any diligent crypto fan into deep thought
But what exactly impacts the value of cryptocurrencies? What are the factors that affect the values? Let us discuss points that we need to
keep in mind before investing in a cryptocurrency.DemandCryptocurrency, though not tactile and visible like fiat currency, is quite similar
Both the currencies draw their importance in society from their acceptance and usage among people as an exchange medium
That brings us to the first factor that determines cryptocurrency's value —demand
As the usability of a coin increases, its demand rises, which, in turn, increases the coin's value
This has been one of the important reasons why major cryptocurrencies have appreciated in value in the last few years.Node countThis refers
to a number of active wallets with respect to a cryptocurrency that can be found on the internet or the homepage of the currency
This is also a factor to determine whether a coin can overcome market crises.Production costOf course, there are production costs incurred
The direct costs and the costs of resources that have gone into the mining of the coin determine its value
Higher the production costs, the higher the coin's value.Mass adoptionThis follows from the first point
The greater the number of takers, the greater will be the value of a crypto coin
That's because, unlike fiat currency, which is produced by national mints in huge numbers, crypto coins are generated in very limited
This is an important factor to help determine cryptocurrency value.BlockchainPrudent investors weigh the security as well as future
prospects provided by blockchains to zero in on a particular cryptocurrency
Beginners may go for the ones that provide maximum security to their coins
However, professional investors look for the future potential of blockchain technologies.Market regulationMarket regulation by professional
crypto traders can also affect the value trends of a coin
This is known as the work of “whales” in the crypto world
This cluster of investors often causes a rise or drop in the value of coins.
