What makes cryptocurrencies go up – Introduction
Cryptocurrencies investors know how volatile the price of these assets is. In other words, it goes up or down in a short period of time. To deal with such an outlook, it’s essential that you understand what triggers these variations. With that in mind, we’re going to explain the reasons that make cryptocurrencies go up.
Here, we’ll introduce you to six factors that affect digital currencies and tend to raise the price quote. Therefore, keep an eye on each of them when setting up your investment strategies. Let’s dive in!
Whales purchase assets
Whales are people or companies that own a large amount of cryptocurrencies. They control hundreds of millions of these assets. This means that their actions have a great impact on the price quote.
Thus, when whales issue a high volume of purchase orders for a given digital currency, there is a quick rise in the values. On the other hand, when they make large sales transactions, prices tend to go down.
Increased movement in the derivatives market
Derivatives are a type of contract made between two parties whose value is linked to a certain asset (dollar, gold, cryptocurrency and so on).
Trading involving derivatives is widely used in the market for several purposes, from speculation to asset protection. They’re made by both large companies and natural people.
Keeping this in mind, when we see a large number of cryptocurrency derivative contracts in progress, it means that the market is warm. As a result, the value of currency quotes tends to go up.
Hashrate indicator high
Hashrate is one of the most important indicators when it comes to cryptocurrencies that use the mining system, such as Bitcoin (BTC) and Ethereum.
Hashrate is related to the speed at which miners can process data within the Blockchain. Therefore, the higher the number of this indicator, the greater the amount of machines and processing energy is being used. This means that there are more miners involved in the process.
As a consequence, a cryptocurrency’s network that has a high hashrate is seen as more secure. After all, it increases the difficulty of a hacker attack. This attracts more investment and drives prices up.
You can track the hashrate of the cryptocurrency you’re interested in just google it.
These articles might interest you as well:
- Blockchain and cryptocurrencies: What you need to know?
- Cryptocurrency mining: Understand how it works
Growth in the Number of Active Entities
The Number of Active Entities is another important indicator that affects cryptocurrency prices. It represents the number of active addresses within a network, in other words, senders and recipients who have made successful transactions.
When this indicator increases, it’s a positive sign. After all, it means that the network of a given digital currency is growing, either horizontally or vertically.
A horizontal growth means that there are new participants interacting within the environment. When the growth is vertical, it means that the former participants of the network are carrying out a greater volume of transactions compared to previous records.
Any of these situations shows that the market is heated. This makes cryptocurrencies go up.
Bitcoin value increase
Bitcoin is the main currency of the crypto universe. Therefore, its price serves as a reference for other quotes in this market.
This means that when the value of Bitcoin goes down, it negatively affects other cryptocurrencies. However, when its price goes up, it pulls a general increase in the other values .
Investment by large companies
Each day, large corporations are investing in digital currencies, mainly as an alternative to escape inflation. As this occurs, the market heats up with new moves, causing prices to go up.
Furthermore, these investments tend to increase the credibility of the population around crypto. In this way, many people feel safe to bet on the crypto universe and make new applications. Consequently, demand rises, as do prices.
What makes cryptocurrencies go up – Conclusion
As you can see, several factors affect cryptocurrencies and can cause prices to go up. Added to these possibilities are specific issues that cause the increase of the asset.
Therefore, be aware of everything we introduced before investing, and be aware of market information. After all, many of the issues mentioned throughout the article help to make predictions and elaborate well-designed strategies.
So, dive into the content and regularly study the crypto universe. To complement your study, we recommend reading the article: Why are cryptocurrencies going down?
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