Crypto Price: What Works Behind the Fluctuation? [Final]

For small-time investors, finding out the most suitable crypto coin is essential. However, your most scrutinized findings and working with it may result in the worst decision you may have ever taken— the reason is simple— big investors have what it takes to muzzle the growth and fuel the downfall anytime and vice versa.

Photo by Shubham Dhage on Unsplash

But, data doesn't lie. And sometimes, you have to trust your gut to fight what's behind the veil. It's a gamble that favors the fortune, and to some extent, long-time players.

If you are interested in making quick money, don't go to a monkey (aka shaman). Instead, learn to read the charts like an archeologist reveals the artifacts centimeter by centimeter, inch by inch- patiently but surely. Maybe you can strike the iron just before it becomes cold again or right before the bull awakens.

So, as a part of discussing the factors that determine the crypto price, here is the third part that brings an end to this series. I am not a skilled investor, not even have traded but a few cents (literally), I think you will get a quick overview of the factors that work behind crypto price fluctuation.

In the last two parts, I have discussed how market demand and supply determine the price of cryptocurrency and the motivation that works behind its price fluctuation through mainstream media and authoritative adaptation. Today we will see how authoritative regulations and specific crypto terms 'mining cycle' influence the crypto price. So let's begin.

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Authoritative Regulations & Mining Cycles

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Big fishes like governments and big-time investors definitely influence the price hike in the crypto world. At the same time, they are the reason that causes price drop.

For example, like I’ve mentioned in the second part how the government's interest in crypto awakens the bull. Now, if the same government wants to control this bountiful arena and try to monopolize it, what to expect in return?

Clearly, people will lose interest in it and the confusion about what may happen after an authoritative decision is taken into action results in disengagement— coming next, a price drop.

In the US context, the federal officials declared in recent months that they will have their “patrol” on crypto— and earned much criticism from the investors and crypto experts.

Such as Seth Ginns, a CoinFund managing partner, said —

“the Fed moved to a hawkish position [on crypto regulation] just as Omicron started to tick up in the U.S.”

We have already seen the aftermath of the motif; a price drop in Bitcoin and a bearish vibe in the market for the time being.

And the experts are fearing what Biden's executive order would bring to this industry in the long run. Surely, people don’t like to get their transactions monitored by the government here— not by the IRS, but, this has been proposed and Treasury Secretary Janet Yellen’s announcement about stablecoins — a type of crypto linked to the value of the U.S. dollar — should be subject to federal oversight.

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Hive is a stable coin backed by the US dollar, right? Well, I’m not liking their idea about stable coins or any sort of crypto coins, but, who would fight them?

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Again, when China imposed a ban on crypto back in September 2021, Bitcoin’s price went down overnight. However, it has successfully recovered in the following months but the decision taken by the Securities and Exchange Commission around the world is making it a shady asset— creating confusion among investors and newbies.

These sorts of regulators are trying to own the show, but, the degree to which the crypto world is decentralized, it’d be quite a challenge to fight against.

Like regulatory bodies, mining cycles affect the price and to some extent, influence heavily with its algorithmic nature.

In short,

It induces inflation in the cryptocurrency's price by reducing the number of bitcoin in circulation and increasing demand for Bitcoin. ref

Also known as halving, the theory works this way—

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The reward is halved → half the inflation → lower available supply → higher demand → higher price → miners' incentive still remains, regardless of smaller rewards, as the value of Bitcoin is increased in the process

The first Bitcoin halving occurred on Nov. 28, 2012, after a total of 10,500,000 BTC had been mined. The next occurred on July 9, 2016, and the latest was on May 11, 2020. The next is expected to occur in early 2024. ref

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Being the king of cryptocurrency, Bitcoin determines the value of other coins— more or less. So, if you are investing in crypto, make sure you have read the transaction charts like an expert. Otherwise, a loss is imminent.

psst… I have got a nearly-impossible-to-fail theory to make profits from any crypto coin. Just hold on till the price gets up ;)

Just kidding……

[this is the final part of an ongoing series that discusses the factors that affect the crypto price. Hope you enjoyed reading it.]

Read the previous ones here and here

[All content is mine unless otherwise stated]