The cryptocurrency market attracts many investors worldwide because it is the only financial instrument where you can get such a significant profit relatively quickly. However, many novice investors do not understand how cryptocurrency prices today are formed. So, in this article, we will try to answer the question, “How do crypto prices work?”.
How is Ethereum Price Formed?
Early crypto investors who bought digital assets many years ago remember the price of cryptocurrency very well. For example, back in 2015, you could buy an ETH coin for 10 cents. It’s hard to believe, as at the time of this writing, the price of ETH is $1554, and the all-time high was fixed at $4810. Theoretically, the invested $1000 could bring the investor $48,100,000 at the peak or $15,540,000 now.
What Does the Price of Cryptocurrency Depend On?
Many beginners do not understand who forms the cryptocurrency coins price and why they have such huge volatility. In fact, the answer to this question is quite simple: the rates of digital coins are determined by the laws of the market, that is, the ratio of supply and demand. For example, if many people want to buy a particular cryptocurrency, and there are not many sellers on the market, the asset’s price will increase. This rule also works in the opposite direction: if the number of sellers exceeds the number of buyers, then crypto prices in real-time begin to fall.
Factors affecting cryptocurrency coins price:
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Investors sentiments
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Overall market trend (Bear, bull)
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Significant events and news background.
Looking at cryptocurrency prices today, you can see that the cryptocurrency market is going through hard times. According to experienced investors, this is the perfect time to buy digital assets. After all, it is much more profitable to buy when everyone is afraid to buy and to sell when everyone wants to buy.
