Like any asset, cryptocurrency is heavily influenced by certain external factors.
So, to properly look into the cryptocurrency trading platforms South Africa and others have access to, we must look at the factors that affect the value of these unique assets. These are a few of the main aspects that play the most substantial role in this process.
- Limited Supply. We have touched on this earlier, the limited supply of these assets means that eventually no more of these specific units will be added to the pool. For bitcoin for instance, the maximum number possible is 21 million. At this point, no new coins can be mined from the current block chain network. For bitcoin trading Philippines and beyond this can send significant ripples across the market.
This will play several roles on the price of the currency. Firstly, as they are released, the value will change, especially because they are mined from all around the world and the number available changes quite rapidly. Then also, once the maximum has been reached, there will be further fluctuations as others react to this and the market settles a bit.
- Competitive Market. Another important piece of the cryptocurrency trading South Africa and the world over, is the inherent competition found within this marketplace. With so many different digital currencies, there is a constant competitive angle as they jostle for attention and market value. As confidence in one of these assets grows, it may fall in the others. Being mindful of where this attention may fall is critical to knowing where to invest.
- Public Opinion. Digital currencies have been around for over a decade now and yet there is still mixed opinion over their value and use. Public opinion holds a significant amount of power when it comes to determining market value and this is even more the case with assets as volatile as these digital ones.
On top of this, the block chain connection they all share means that users can monitor the network and observe substantial changes in the positions and holding of these currencies. If someone with a lot of a particular currency decides to suddenly start selling, it will create a significant chain reaction that may result in massive changes in the value of these assets.
- Significant Events. This is a factor commonly found on most tradable assets. Large scale events can have dramatic effects on the value of most assets. This is even more so with the digital cryptocurrencies because they lack a physical connection. This means that global changes and announcements can have large scale effects on the value of these currencies.
- Regulation and Integration. A final factor that plays a large role in the values of bitcoin trading South Africa and the world over, is the regulations involved and the integration rate. Crypto is fundamentally still a new form of asset compared to all the others on the market. This means that there are regulations in place that govern its use and accessibility to different countries.
Additions and subtractions of these regulations have a large effect on the values of these currencies and can create rapid changes. The same applies to the integration side of these assets, where regulations generally have a significant sway over. The more people on board and able to work with crypto, the more its value will rise and remain stable.
All in all, there are some important factors that play a role in the value of cryptocurrency and it is important to keep an eye on each of these while trading.