Factors that drives the cryptocurrency market.

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In the cryptocurrency industry and the financial market at large they are some contributing factors that help to push the market to an intended position or price levels, the market actually moves due to availability of liquidity or presence of buyers and sellers and to this effect their are some factors which may likely attract buyers or make people to sell.

Today I will be writing on some of the factors that drives the market because almost all market today both the traditional markets like stocks and cryptocurrencies are mostly driven largely due to one factor or the other and this I will be writing on as these factors ofcourse vary accordingly.

Some of the factors driving the cryptocurrency market

One of the the factor that determines the direction of a market is on the demand of that market, for instance let's say am selling battery and overtime the demand for this torch becomes higher or increases up to even 5× from what it was before which means there is a competition to get my product knowing this I would most likely increase the price of my product to see how many people would still be willing to buy it.

The same way in the cryptocurrency market when there is a high demand of an asset it lead to increment in price, it helps to drive the price of that asset considerably higher than what it is ordinarily so when there is increase demand of a product that is one of the driving factor or force in the market.

Also another thing is supply, supply and demand coupled together determines likey where a market is likely going to go especially like we see with Bitcoin, and asset with fixed or limited supply and ofcourse the overtime increase in demand helps to drive the price up in other hand if and asset has unlimited supply or abundance of supply and the demand for that asset is considerably low then the price of that asset would be very insignificant.

So in this way supply and demand helps to drive the cryptocurrency market.

Also economic indicators aside from the demand and supply is another factor which drives the market because when the economy of a place is sound then the consumers would likely spend and do more investment and this all contribute to the overall growth of the market so a good economy helps to drive the market as well

Also in an event where the there is a reduced interest rate this also help to considerably contribute to the growth of the market as people will be more encouraged to borrow and invest and spend when the interest rate is lower as against when the interest rate is higher infact a high interest rate is bad for the growth of the economy, so low interest rate would likely help to drive the market in a good direction as it leads to increased business activities.

Also we have the general market sentiments or consumer confidence, the sentiments has to do with people general feeling of the market at a particular time they are times when investors are feeling rather confident to invest in the market maybe because they feel confident about the economy and in this time they are more willing investors and buyers and this increased activities help boost the market to great heights.

But when there is bad vibes or sentiments consumers shy away from the market then this spells trouble for the market cryptocurrency or traditional assets class because the investors are the ones that make or break the market and when there is fuds spreading or when they are feeling rather negative about the economy instead of investing it may lead to panic selling and that may cause major dumping in the market.

As with cryptocurrency market for people to also invest they likely would like to know that projects teams are actively working on the project like when we have new innovative technology from a project or any major updates they are rolling out like in the case of ethereum with the eth 2.0 which is expected to solve scalability issue and reduce it's insane network cost, this upgrade also attracts investors into the market as more people who were once opposed would be opened to the opportunity of doing business or investing.

So technological advancement is one of the factors driving the market as consumers would be comforted in knowing that one hasn't given up on the project and still working to improve it as new technology emerges this would help to create even more demand and help drive the price of that asset.

Regulatory environment surrounding cryptocurrency asset also plays a major role too as some government policy may restrict people who were once willing to invest for instance the case of xrp which has had a case with the sec for years on the issue of being a security it limited willing investors as they shy away from it and this made this project not to reach its true peak potential last bull run.

But ofcourse as this is resolved it is set to do great this period because when regulations are favorable it ensure more consumers are willing to invest favourable regulations helps to increase consumer confidence and that is good for the growth of the market, so in this way regulatory environment helps to drive the cryptocurrency market.

Conclusion

It's really important we familiarized ourselves with the factors that help to drive a cryptocurrency market so we are able to make wise informed decisions and it's important to also know what the general market sentiments is at the time this is really important in ensuring we stay afloat in this market.