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What factors affect the value of cryptocurrencies

 In the Cryptocurrencies market, many investors and speculators have many mixed and sometimes conflicting feelings. Between optimism and pessimism, fear and reassurance, conservatism and adventure, and this rise and decline, traders' trading methods in this market vary. 

There are those who follow their intuition without scientific or cognitive basis in making the decision to sell or buy, and those who study and analyse the different indicators in the world of technical analysis.

Cryptocurrency fluctuations often top the news on the virtual asset market, and at times fluctuations of up to 20% or down during the day are no longer unusual, but see what determines the rise and fall of cryptocurrencies?

What factors affect the value of cryptocurrencies

There are many key factors leading to higher or lower cryptocurrency prices. The following report reviews the main factors:

1-Supply and Demand:

This is considered a basic economic principle. If a cryptocurrency has a high supply with little demand from traders and users, the currency will devalue. Conversely, if the offer of a particular currency is limited and demand is high, the currency will increase in value.

This is linked to the scarcity element that pays prices and is one of the factors that led to bitcoin's price rising to its highest levels. Bitcoin's supply stops at 21 million bitcoins - relatively low compared to other cocktails - while demand has risen in recent years.


Speculation is one of the most influential factors in cryptocurrency prices. Speculation can raise the price of a particular currency to very high levels, and it can also take it to sharply lower levels.

Fast and strong fluctuations are what differentiate cryptocurrencies and open the appetite of traders, because they create opportunities to earn money through short-term selling and buying, but they naturally come with higher risks.

Speculators aspire to make huge fortunes by dealing on cryptocurrencies, but buy them and sell them very quickly, resulting in short-term volatility.


The perception of the cryptocurrency market - from country to country - varies between the recognition, prohibition or warning against trading of these digital assets, without being prevented, considered illegal, or strictly regulated, and new decisions are made all the time.

In an era of globalization, decisions in one State can affect the entire world. Cryptocurrency rates tend to respond quickly to any decisions about legalizing or blocking them, for example, when Japan announced bitcoin as a legal trading tool, their price rose strongly in just 24 hours. 

Japan, which previously accounted for only 1% of bitcoin trading volume, reached 6% after its decision to legalize its cryptocurrency transaction, and Japan even achieved 55% of global trading volume on some days.

 And in the opposite example. When China earlier imposed strict measures on the digital currency, causing a major crisis, especially since China generates about 60% of bitcoin. But it later relaxed those measures and allowed mining companies to operate under much less stringent measures, contributing significantly to increased confidence in the digital currency market.

4-Media Hype:

Positive media coverage is one of the main factors driving cryptocurrency rates. Positive media coverage causes a kind of well-known media noise.

If there is a currency that gets some negative publicity, you will generally see that the price of this currency will decline. While if the currency itself gets significant support and good media coverage, the price will definitely increase. This means that prices are heavily influenced by human emotions and fanfare.

This pattern was most evident during the early days of bitcoin, when the mainstream media began to provide a detailed report on the new currency. With increased media coverage of bitcoin news and price volatility and other currencies, as well as some other factors, it has become difficult to determine the media's impact alone.

5-Political developments and events:

Events and developments around the world seemingly unrelated to digital currencies can affect prices. These assets are usually seen as an alternative to traditional government-backed currencies, so when investors lose confidence in their paper money due to economic or political developments, they can resort to a "composition", raising prices.

Some experts believe that cryptocurrencies can replace real holdings of gold as a safe haven for value when things turn worse, and although the World Gold Council considers these assets to be too volatile to perform that task, analysts are likely to rise as global political conditions are turbulent.

Digital currencies benefit from shaking confidence in official currencies, amid the quantitative easing policies by which major central banks print paper currencies with little cover of gold or commercial goods.


As in traditional markets, there are no guarantees when it comes to future price expectations for the cryptocurrency market.

It is quite clear that cryptocurrency price forecasts should be taken with some degree of doubt, but always there are factors to look at and will certainly have an impact on the future price of bitcoin and broader cryptocurrencies.


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