What is Cryptocurrency?
Cryptocurrency is a secure form of digital currency used to exchange digital goods using blockchain technology. It can be bought and sold, and you can invest in different types. Cryptocurrency prices change daily, so it's essential to understand when to invest, when to sell, and what your crypto is currently worth.
Blockchain technology confirms transactions during trade and proves that the relationships between those transferring the cryptocurrency are legitimate. Even as each type has a specific purpose and platform, they all use blockchain technology to maintain anonymity during each exchange.
Bitcoin is by far the most popular cryptocurrency, but Ethereum, Ripple, Tether, Dash, NEO, and many others have become available to trade on the market in recent years. You can mine cryptocurrencies to trade at different rates using various methods.
Trade prices fluctuate and vary between each type of crypto. No two are the same, and several factors affect the price of each kind. For this reason, if you're planning to buy or sell crypto, keep an eye on the charts, so you don't miss out on prime opportunities.
What Affects Cryptocurrency Prices?
Trade prices change based on several market factors, which means that trade prices never stay the same for long. If you look at the trade market for each form of crypto, you'll find that the value of each type of coin is affected by a few specific factors.
- Supply and Demand: As with any commodity, supply and demand determine whether the market for crypto goes up or down. For example, if there isn't a lot of Bitcoin available, investors are more likely to see this as an opportunity to sell their Bitcoin, as they are more likely to find a buyer quickly.
- The coin market cap also plays a role in trade. You can find the market cap by multiplying the price of a particular currency by how much of it is currently circulating.
- Exchanges: Cryptocurrency prices depend on which exchange people use to buy and sell their crypto. Each exchange sells at a different price, which means you may be able to get it much cheaper on one exchange platform than another.
- Legal Regulations: As more and more people invest in cryptocurrency, the need for legal intervention increases. Regulations in different countries, like China, determine who can invest in crypto, as well as when and how you can sell it on exchange platforms.
How are Cryptocurrency Prices Determined?
The primary factors that determine trade prices are adoption and speculation. These factors can mean different things depending on the type of crypto you're trading.
Speculation is more straightforward than adoption. It just means people are trading their coins. The volume of available coins creates spikes and dips in the market. When investors see an opportunity to buy or sell to their advantage, they jump at the chance, and that helps determine the price of that cryptocurrency.
Adoption is more complicated, and it depends more on the cryptocurrency and its creators than the people investing in it. Each type of crypto, whether it's Bitcoin, Ethereum, or Ripple, serves a slightly different purpose, and therefore the market cap coin for each varies.
Adoption means that people use that specific type of cryptocurrency. If the crypto works the way it's supposed to, it serves the purpose it says it will. The more it lives up to its designated purpose, the more likely people are to adopt and use that currency, and the higher its trade value. The more it's used, the more present it is on the market.
What Times of Year Do Cryptocurrency Prices Fall?
If you follow the trade market, you know that sometimes trade prices fall fast. While these sudden and dramatic price drops may seem random, they're not. They follow a fairly consistent pattern from year to year.
Cryptocurrency prices often rise and fall with the seasons. Over the summer, many people have more time and money to invest, so the market is livelier. However, once the winter months hit, especially in the transition from one year to the next, we often see dramatic dips in crypto prices like Bitcoin.
The most likely reason for these price drops is financial stability. The end of the year means major holidays and celebrations. Many people don't observe the market because they can't afford to trade, and the market plummets within days.
If anything, they're trying to sell it, and with the high volume of available crypto, fewer people are buying. However, prices are always predicted to rise again in the near future following these drops. While bearish trends reign in the winter months, it doesn't take long for things to turn bullish again.
How to Buy Gold and Silver with Cryptocurrency
As the popularity of cryptocurrency rises, so does its use. It's now accepted as payment beyond the digital space, which means you can buy physical goods and use it to invest in other commodities. Now, many bullion companies allow you to buy and sell gold and silver using cryptocurrency.
Buying gold and silver with cryptocurrency is simple, and because so many bullion companies now accept it, many times, you can shop on their website, and at checkout, simply select the cryptocurrency payment option.
Before you plan to buy gold or silver with crypto, know that some companies and exchanges only accept certain types of cryptocurrency. Bitcoin is the most widely used form of crypto, according to the coin market cap.
Some of the more widely used gold and silver bullion companies accept alt coins. Others require you to exchange alt coins for Bitcoin or another popular cryptocurrency and then pay for your gold or silver using one of those currencies. Some companies also have a minimum and maximum payment amount specifically for cryptocurrencies.
If you plan to invest in gold or silver in the future, keep a close eye on the market and keep track of live data. Cryptocurrency prices are always in flux, which means that they also affect your ability to invest beyond the digital market.
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