Crypto What Defines A Coin’s Price?

To invest means you never should stop learning. You should keep learning new theories about markets, read new analyses of well-known traders/investors and try to understand the way they look at the market, read new books to keep us moving in the right direction…

One of the best ways to start analyzing the coin you’re about to invest in is to read its white paper. By reading the white paper you’re learning about the project, the team who are handling the project, the project’s road map, and to put it simply, you’re learning what you’re getting yourself into and the risks it can carry.

Supply And Demand​

The law of supply and demand explains the interaction between buyers of a certain good or resource and sellers of that resource (We are talking about crypto market so we won’t refer to it as goods or resources and will call it coins).

Transaction Fees​

Transaction fees are the main cost of using a coin to make a transaction, it’s the reward for miners who validate the transactions and help secure the blockchain.

The effect of it really depends on how much the transaction fee rises. If it rises slightly it can cause to attract more miners that will result in a faster blockchain. If it rises a lot (and I mean A LOT) it also causes more miners to mine the coin but on the other hand, it causes people to stop using the coin for transactions, or at least it reduces the amount of network’s users.

Halving​

Halving refers to the event of the coins miners receive as the reward cuts in half. For example, if you used to receive 10 coins for mining blocks, after the halving you will receive 5 coins for mining a block. You may wonder how this affects the price.

Influencers Opinion​

We all have been witness to this when a celebrity talks about a coin or token, their community and mostly their hard-core fans will buy the coin or token no matter what and only because their favorite celebrity mentioned it once or twice (or even more in some cases).

White Paper​

A white paper is a piece of document which gives you information about the main goal of the project, their use case, or in other words the problem they’re going to solve, the team who’s working on and developing the project, and the project’s road map.

News​

Unfortunately one of the things that will cause a coin price to rise or drop is news, but fortunately, news affects markets only in a very short period of time.
For example; when the Covid-19 started spreading and the whole world was scared and uncertain about their future, markets were bearish for a couple of days, then most of the financial titles on news and newspapers were about if capital markets were going to crash, which caused a lot more uncertainty and fear, which in the end caused markets to crash.

 

[minenovo]

Except the halving and the white paper I would say that the same things that influence the price of all other things influence the price of cryptos.

 

[Good-Guy]

I have always believed that there are various kinds of factors that are responsible for a coin's price's fluctuation and surges. Some of them include the total supply or demand of the coin as you stated and the market conditions as well. This means the coin's price is dependent on how much the coin is being sold and bought in the market.

 

[Nite]

Cryptocurrency prices are influenced by certain factors. First of all, as you described the supply and demand in the crypto market. Second, comes the cost of production of that cryptocurrency through the process of mining. Third, is the number of cryptocurrencies competing in the market. All these complex combination of factors determines a cryptocurrency's price.

 

[btaliat]

Thanks for this beautiful information the poster. The price of any coin is being determined by the law of supply and demand the most. When a coin is heavily demanded, there is tendency for the coin to have increment in price. Also, the activites of whalers these days do affect the price of coins.