^{Designed in Canva}

---

Can news affect the prices of cryptocurrencies?

---

If we look at it, the concept of cryptocurrency is still pretty new to the world. Before the introduction of modern currencies like dollars, pounds, and rupees, we used precious metals like gold and silver as coins. These metals worked as currency because they had intrinsic value. But then, around the 1800s, paper currencies came into existence backed by government authority.

In 2009, when Bitcoin made its debut, it was a digital currency not backed by any government or bank. It was the first true decentralized cryptocurrency. Even though Bitcoin only surfaced about 15 years ago, today we see countless crypto coins launched in the market, and the whole world is in the process of adopting them. Given the rapid increase in demand for blockchain and crypto, I believe that in the future, cryptocurrencies might replace traditional ones.

Currently, since cryptocurrencies aren't fully embraced by the mainstream, their prices are highly volatile. Almost any news or announcement can influence their values, whether positive or negative. For instance, when there's positive news like the launch of a major cryptocurrency exchange or a country accepting it as legal currency, its value shoots up. But, in the event of negative news, such as an exchange hack or a country imposing restrictions on it, values plummet.

However, as cryptocurrencies become more mainstream, perhaps news will have a diminished impact since people will trust them more. Right now, many view cryptocurrencies as risky and volatile, making them more reactive to news. But with the growing use of stablecoins like USDT and algorithmic stablecoins, and incoming regulations, we might see more stable prices. At that point, news might not have as much sway, but for the foreseeable future, news definitely impacts cryptocurrency prices. 📈

---

Which has a greater impact on the price of a crypto asset: technical or fundamental analysis?

---

To answer this question, I will first explain to you the difference between technical and fundamental analysis. Because until you know the difference between these two, you won’t be able to judge which one has more impact on the price of a crypto asset.

First let’s talk about technical analysis. Technical analysis studies trends and patterns related to historical price movements in crypto. It analyzes things like support and resistance levels, trends, volume analysis and indicators like RSI etc. From all these future potential price movements are predicted. On the other hand, in fundamental analysis we look at the quality and fundamentals of the underlying crypto asset. Like how its technology is, how much adoption it has in principle, how much support developers have, what its roadmap is etc. From these things we understand what should be the actual value of crypto.

Both types of analysis are crucial, but if I had to choose, I'd say that fundamental analysis has a more significant impact on a crypto's price in the long run. The solid underlying technology and utility ensure continued adoption, which will then lead to sustained demand and an increasing price.

For example, people trust Bitcoin because of its transparent and decentralized ledger, increasing its demand and consequently its price. Ethereum, with its smart contracts, has managed to attract a plethora of developers and projects. Such strong technology will stand the test of time.

However, if the fundamentals of a crypto are weak and it thrives only on hype without revolutionary tech, it won't survive in the long run. Speculation can temporarily inflate the price, but it won't be stable.

---

Do events such as massive coin sales, coin burning, and the creation of new tools for a blockchain affect the price of cryptocurrencies? If so, can you provide examples and explain how?

---

Absolutely, events like massive coin sales, coin burning, and launching new tools on a blockchain can indeed impact cryptocurrency prices. Let me break it down for you:

Massive Coin Sales

When a cryptocurrency company holds a large number of coins, it means there's a significant supply. If this company sells a large chunk of its coins, increasing the market supply, but the demand doesn't keep up, prices can drop. For example, when Ripple sold a substantial amount of its XRP to institutional investors, the increased supply, without an equivalent increase in demand, led to a decrease in its price.

Coin Burning

Coin burning is when coins are permanently removed from the circulating supply. By sending them to an address where they can't be retrieved. For example, here on Steemit, when we set 25% beneficiary to a null account in burnsteem25, we are burning 25% of our rewards. When coins are "burned" from the market, the supply reduces. With a decreased supply but steady or increasing demand, the coin's value generally increases.

New Blockchain Tools

When new dApps, protocols, or features are launched on a blockchain, enhancing its functionality, demand can shoot up. For instance, the advent of DeFi apps on Ethereum has revolutionized finance. As a result, Ethereum is now the second most valuable crypto asset after Bitcoin.

---

Can you research a news event that had an impact on the cryptocurrency market?

---

In response to this question, I’d like to share an example of MicroStrategy company which is a publicly traded tech company. They announced in August 2020 that they were going to invest their cash reserve in Bitcoin because they no longer had confidence in Dollar.

After this announcement, there was a long bull run in Bitcoin’s price because an established tech company made such a big investment in cryptocurrency. It was validating that there is real value in Bitcoin and it is a reliable asset in the long term.

This gave both retail and institutional investors confidence that there is potential in Bitcoin. And started a wave where people started buying Bitcoin from all sides. In a few weeks, Bitcoin’s price had increased quite a bit. So, this way investment decision by credible tech company like MicroStrategy changed the entire market sentiment. People thought Bitcoin is here to stay and there is a lot of scope in its future.

---

Is it possible for the cryptocurrency market to be manipulated? What is your understanding of this topic?

---

In my opinion, yes, the cryptocurrency market can be manipulated to some extent. This is because there are no proper authorities to regulate this market yet. And for this reason, some people can misuse it for their own purposes.

For example, some large investors in cryptocurrency, known as ‘whales’, who trade in very large chunks, can manipulate market sentiment. If they dump their coins, others get scared and start selling their coins too. This causes general panic and prices fall.

Similarly, there are websites that publish positive or negative news that spread fake news to move the market in the short term. Whatever news is published on their websites, people take it as true. Then there are people who spread false myths about cryptocurrency and lead others astray. New investors suffer because of them.

But I think this manipulation is possible in the short term. In the long term, every cryptocurrency has its own fundamental value which depends on its underlying technology or economics. For example, due to Bitcoin’s limited supply and decentralized nature, its value will continue to increase in the long term because it is a scarce digital asset. Similarly, the smart contracts that run on Ethereum are very useful, so its demand will always remain.

---

I trust that you found the information in my article to be valuable. 😊

---

^{I would like to invite @lhorgic, @o1eh, @artist1111, @chasad75, @malikusman1, @inspiracion, @steemdoctor1, @irawandedy, and @josevas217 to join this contest through this link, if they have not already taken part in it.}

---

^{Author: @waqarahmadshah | Date: 15-Aug-2023 | Achievement 1}