Which Factors Affect The Value Of Bitcoins? Note These Points

In the recent times, there seems to be a rise in the demand for cryptocurrencies. So, what has made the crypto market grow so popular? One of the three reasons for the driving passion towards the investment in crypto is the returns that it promises and the value that it holds. Read on to know further.

Important factors that impact the pricing of cryptocurrencies

1. Node Count- This highlights how many active wallets are there on the system. It’s very easy to fetch this information. You can do a Google search and get all the necessary details. Besides, it also indicates the strength of the decentralized network, and both these factors play a significant role when it comes to cryptos. The more the number of nodes, the stronger is the community, and hence there is a greater chance for the currency to overcome the crisis. To understand the pricing of the cryptocurrency, all you need to do is to check out its node count and total market capitalization compare them with the other cryptocurrencies that you have shortlisted, and you will be able to find the right option.
2. The cost of production- It is a known factor that miners have to work rigorously to add more cryptos into the market, and they are rewarded in return in the form of virtual tokens off add a network fee. the activity of miners is responsible for the similar functioning of the decentralized cryptocurrencies and so if the mining cost increases the value of the currency will also in.
3. Cryptocurrency exchanges– Coinbase, Gemini, and dogecoin-millionaire.app are some of the popular cryptocurrency trading platforms. These platforms have made it easier for people to register themselves to start the trading journey. In case you require to swap your cryptocurrency across different currency exchange platforms, you may have to pay a fee for this, which eventually increases the cost.
4. Government regulation- Unlike the earlier times when crypto was fairly new in the market today, governments across the globe are considering forming a framework to regularize the use of cryptocurrency. They are incorporating methods to regulate and control the crypto market, and the easiest way is to levy the taxes. With the taxation coming into the picture, the cost is eventually going to rise.
5. Scarcity of cryptocurrency- Demand and supply theorem also applies in the case of the crypto market. If there are fewer cryptocurrencies in the market, the prior is definitely going to shoot high. There are some crypto projects that also burn the existing coins by sending them to unrecoverable addresses; this way, they try to control the crypto market, and this phenomenon also impacts the pricing.
6. Social media platforms- If there is one thing that is majorly impacting the decision-making process of any individual in recent times, then we have to name social media as one of them. Cryptocurrencies are gaining hype on the social media forum, and whenever such height is created, it impacts the pricing of the cryptos. On a similar note, a rumor regarding cryptocurrency can also lead to a downfall in its pricing.

Final Words

These are some of the important factors that impact the pricing of cryptocurrency. If you have decided to make a move in the cryptocurrency trading world, understanding how this ecosystem works are important. And pricing and valuation of cryptocurrency are the important aspects of this ecosystem. Knowing how the trading market operates and what are the factors that can impact the profitability of your investment will help you make a wise decision.