Factors that influence the price of Cryptocurrencies?
Hey guys,
I'm looking at the prices of some coins right now and I can't help from feeling worried. I would like to ask you guys the following questions.
Are the prices mainly dominated by their demand for trading purposes? rather than their demand from people who actually want use the currency?
If this is indeed the case, has a study been done to determine these two proportions?
If most of the coins demanded are by traders for investment purposes, does it mean the prices are super inflated? and don't actually represent the real values of the currencies?
Thank you ahead of time for the information guys.. I'm pretty new to the scene but very interested.
Cheer
cvanlaer
Yes. Bitcoin is the currency with the most real demand and my guess is that there is still a lot more speculative demand than real demand
It would be very difficult to get accurate info on this but you can look at transaction volume and compare it to daily volume to get an approximation but even this wouldn't be accurate as many traders also send coins in and out of exchanges.
You can also contact payment processor like bitpay.com and ask them some numbers, like how many people actually spend bitcoin to buy stuff.
People are speculating on the future price of these crypto currencies, and since they are a superior form of money people are very confident about them. Most of them also have a limited supply so people hold them like gold as an hedge against inflation.
So yes currently most of them are inflated, the price can drop very quickly on a bad news but the potential growth for these crypto is enormous and if you look at the chart you can see that they are growing every year.
Very informative response @snowflake. I'll look into bitpay.com to see if there's some valuable information there. Thank you for the tip!
Good points in this article. I was about to post a similair thread. Though prices might seam inflated for now I don't think they will look like this 2, 3 years from now. This is quite an interesting website I found: https://www.coincheckup.com This site did all the research for you. It's truly amazing.