Amid recent fluctuations in the exchange rates of most cryptocurrencies and the past Bitcoin halving, many users are concerned about what has the greatest impact on the value of digital assets. In this article, we discuss the main factors to pay close attention to.
How Value is Formed
The main factor influencing the price of digital assets is market participants' expectations. For example, if they believe that a cryptocurrency will start to rise in value, they buy it, and as a result, its price indeed starts to increase. These expectations are influenced by the news agenda surrounding the asset or the platform associated with it.
The first significant surge in the value of digital assets was recorded by analysts in 2010. During this time, Bitcoin increased sixfold from its initial price to $0.39, whereas a year earlier, the value of the first cryptocurrency was around $0.00099.
2010 was also notable for the purchase of two pizzas from the American chain Papa John’s for cryptocurrency. At that time, their cost was 10,000 Bitcoins, and more people started talking and writing about cryptocurrency, increasing its popularity. By 2013, the circle of people familiar with this cryptocurrency had greatly expanded.
For example, the famous rapper Snoop Dogg announced on his Twitter that his next album could be purchased with Bitcoins. The popularity of cryptocurrency, along with market participants' expectations, continued to grow.
As a result, in March 2013, Bitcoin could be bought for $100, and by April, it was $230. Alongside the rise in the value of digital assets, cryptocurrency payments became increasingly common.
These transactions went beyond just buying lunch and included real estate. The first such transaction occurred in 2017 with the purchase of three luxury apartments on the Adriatic coast in the city of Budva. The total bill was 420 Bitcoins or $3.2 million, at the exchange rate of that period.
News Background
Interestingly, both real news and fake news can influence the value of cryptocurrency. One noticeable price spike was triggered when one of the most popular portals, Cointelegraph, published a fake news story. It claimed that the SEC had finally approved the release of a Bitcoin ETF. This news turned out to be false, as admitted by the portal's representatives.
When the public realized the situation, the price of Bitcoin began to fall. However, by the end of the week, it gradually recovered, and investors were convinced that cryptocurrency payments and digital currency were attractive sectors for investment.
Payment Security
In addition to the news background, the level of transaction security also affects the value. It is worth noting that all crypto transactions occur in a blockchain system, where information is stored in parts on different computers. Additionally, user data in this system is protected by two-factor authentication. This means that to access your personal account on a payment platform, you need to verify your identity on two devices—via email and SMS. As a result, transaction security is not in doubt.
To summarize, it becomes clear that the value of cryptocurrency is primarily influenced by investors' expectations, which largely depend on the news background. To predict how cryptocurrency will behave, try to stay informed about the news and be sure to read the Cryptadium blog.
