Why the exchange rate of the cryptocurrency is constantly changing?

Causes of changes in the exchange rate of any cryptocurrency can be summarized as changes in the balance of supply and demand taking place in the framework of economic law of the same name. According to this law, there is the dependence of supply and demand of an asset (or product market) and its price.

Of course, this answer seems too broad and should be used with some reservations for "digital currencies". To understand the pricing process more deeply, it is important to define groups of reasons or individual reasons underlying those price changes that directly or indirectly affect the value of the asset/currency. Note that in cryptosuite, and beyond, the debate continues about the nature of cryptocurrencies. What is a "cryptocurrency" (including "bitcoin") is a digital currency, asset, or product — you decide.

In the study of the stock market, you can allocate quite a lot of the criteria that serve to group pricing factors. You can, for example, to group similar factors, highlighting the factors influencing demand and the factors influencing the proposal. We propose to divide the factors of price variation (volatility) on intra-EU and external.

Intra-EU the causes of changes in exchange cryptocurrencies

To internal (intra-EU) reasons of changes in exchange rates include those effects whose sources are confined within cryptocurrency markets. This:

1. The price impact exerted by the efforts of a number of traders and the impact on the course especially the big players. It has long been recognized that there is a correlation: the larger the capitalization of cryptocurrency, the less the impact of major players, and Vice versa. A typical example of a highly-capitalized cryptocurrencies can be called bitcoin if we multiply the price of one bitcoin in the total number, the total amount will exceed 190 billion. Due to this, fluctuations of bitcoin prices greatly depend on the General mood of the market.

The big players (the bulls are inclined at the moment to increase the price of the asset, and bears, seeking to reduce it) using market-based instruments are trying to control the movement of prices when favorable conditions appear. The behavior of the masses of average traders depends on how many of them are currently inclined to purchase the asset, sell it or wait and also how they evaluate the General pricing trends for this cryptocurrency (for example, whether a summary or the probability of a trend reversal).

The greater influence on the course of bitcoin online, especially the price of bitcoin, has a cumulative behavior of the average traders, the better becomes the prediction of exchange rate trends using technical analysis and predictive techniques. The former is based on analysis of information about what was happening on the stock exchange before and what happens now, for example, how changing the exchange rate of bitcoin for the year, for the month or for the last week and how much is bitcoin today.

1. Cross-impact of various courses of crypto-currencies is also possible. So, with the price increase of bitcoin and other cryptocurrencies (altcoins) usually subside in USD, EUR, RUB and other currencies, and to an even greater extent become cheaper relative to bitcoin. This is because during the growth of bitcoin prices is the outflow of funds from altcoins in bitcoin, and previous positions held only altcoins with strong bullish support. It also works in reverse, or a related effect. For example, the outflow of funds in the rapidly growing altcoins from other altcoins, or more moderate, of bitcoin, which, consequently, reduces the rate of altcoins or the bitcoin price.

Thus, there is little to analyze the situation around you are interested in cryptocurrency, useful not to lose sight of those cryptocurrencies, where something is happening or could happen. Continuously monitor the exchange rates of cryptocurrency online for all coins on the market too difficult, but it is not mandatory. Would be sufficient to monitor key news and developments relating to bitcoin and altcoins with significant capitalization.

External causes of price volatility of cryptocurrencies

By external causes we mean those events and trends that take place outside of the crypto markets, however, have a significant impact on these markets. List the most important sources of external influences, significant for the course of the cryptocurrency.

1. The course of bitcoin is influenced by economic factors that reduce the credibility of traditional currencies, as well as trends in the tightening of economic control. For example, the demand for bitcoins is increasing with the devaluation of the national currency, the tightening of control in monetary and fiscal spheres and the overall growing crisis in the economy, both at the level of individual countries and at the global level. All these phenomena were more frequent in 2017, and it is not surprising that the rate of bitcoin has increased; moreover, some cryptocurrency bitcoin has overtaken the rate of growth and increased its cost 30-50 times (while the price of bitcoin has grown tenfold).

On the one hand, it is believed that a reliable positive trend is most typical for bitcoin, so investing in bitcoin less risky. On the other, perhaps the most successful altcoins still have a great potential for growth, especially as the cost of any of them today is much less than the cost of one bitcoin.

You can estimate the rate of growth of the cryptocurrency using graphics on the stock exchange EXMO, and learn cryptocurrency course online, for example, how much is a bitcoin today.

1. The state of the economy and some of the laws themselves can stimulate on the crypto-market demand in the long term. News directly or indirectly associated with cryptocurrencies, usually "work" the course not too long, but the effect of their "testing" can be quite strong (again depending on the capitalization of cryptocurrencies). Often, this effect occurs as suddenly as the news. Among the stimulating crypto-demand news, for example, include:

a) the news of important technical updates in the software mechanisms of cryptocurrencies, such as updating SegWit powered on Litecoin in the spring of 2017. Thanks SegWit the price of LTC has significantly increased only in the first month and a half after its successful implementation, and the news about the end of SegWit served as the basis for further promotion prices up. After it became clear that SegWit on bitcoin is successful, the price of bitcoin during the first weeks of August have almost doubled. The price of bitcoin today is more than double the level of mid-August.

b) a Positive assessment of the role and effectiveness of cryptocurrencies (especially bitcoin) from the mouth of political and economic authority or in specialized economic media.

c) the Spread of some global economic news (we've covered this topic in the first paragraph of this section) can directly raise the price of bitcoin if the news coverage of the global economy in a negative way.

d) news on adding cryptocurrencies, including in the form of futures, on the ordinary stock exchange. This news, first of all, promising in the aspect of increasing bitcoin exchange rate today.

On the other hand, the course can have a negative impact the news of the uncovered vulnerabilities in the mechanisms of some cryptocurrency, hacking and security issues on cryptocurrency services, or about toughening of state regulation of the stock market.

In General, a trader is very important to follow the news and to imagine what about the effect they will "work" for the cryptocurrency courses. It is also important to understand that some news are created with the intention of purposeful influence on cryptocore. Sometimes the manipulation of prices trying to launch even "fake" news. It is therefore important that the attitude of the news was suspended, and the news should be supported by reference to reputable, reliable source.

1. Not only financial and economic but also political shocks can stimulate the demand for bitcoin and, to some extent, to other cryptocurrencies. As example, Brexit in the UK; after the victory of the supporters of Brexit in a referendum the demand for bitcoin has increased significantly. If you continue with such an analogy, even the coming to power of the opponents of European integration in any of the major EU countries could stimulate the demand for bitcoin.