What Determines the Price of Cryptocurrency and How to Predict It?

Crypto assets are funds that circulate in the digital space and have no physical form.
You cannot touch crypto assets and cannot put them in your pocket, but you can create a
digital wallet where you will store your digital coins safely. The application for crypto is close
to how people use traditional money – you can buy services and goods with them, pay for an
airplane ticket, book a hotel or buy tea in a restaurant, etc. However, the real-life sector is
only beginning to interact with blockchain technologies, and it will take some time for crypto
to be adopted and accepted in all businesses and stores. So far, only a few businesses use
this way of payment, mostly Internet stores connected with programming.

On the contrary, financial corporations use digital assets more actively. Some crypto
assets, for example, XRP, provide cheap and instant currency conversion and transfers
worldwide without intermediaries and at low fees, rivaling the traditional SWIFT system. Over
100 financial companies in the world now use Ripple technology for their everyday services.
Still, the main application for digital assets is trading. Let’s talk about it.

Why Do People Trade Crypto?

The digital assets market is still very young and unstable. Crypto prices change daily
and in the long term, opening broad earning opportunities for traders and investors. Those
able to analyze and predict a cryptocurrency price take enormous profits in this field. But
how do they do it? That is hard and tedious work. Let’s first see what determines crypto coin
pricing:

● Technology and real use cases. If an asset has valuable technology that helps solve
some problems, it is in demand, so people want to buy it. High demand drives
cryptocurrency prices up. For example, the SOL coin is one of the most traded crypto
assets in the market, for the Solana platform is actively used by DeFi and smart
contracts developers worldwide, for it offers low fees and high speed of transactions
proceeding.
● Supply. When a coin’s supply is limited, it helps to keep the asset’s scarcity, thus,
maintaining demand at the same level. There is no scarcity when there is an
unlimited number of assets, so there is no reason for the price to grow. The supply-
demand laws work in the crypto market.
● Media coverage. Crypto assets are very sensitive to the news background. When
some bad news comes, the market can collapse in one day. For example, on the day
when the FTX exchange financial problems were revealed, the price of all digital
assets collapsed because investors started to withdraw their funds in panic.
● Regulators. Even though governments and banks do not affect crypto assets supply
and pricing directly, they can do it implicitly. An example is Ripple’s problems with the
SEC, which demands the XRP be named security. Obviously, the court case does
not contribute to the XRP price growth at all.
● The market trend. The market always lives through trends – up and downward
moving prices, and you cannot help it. When the whole market collapses (like it
happened in 2022), all digital coins drop in price.

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What Makes Cryptocurrency Price Go Up?

When demand is higher than supply, cryptocurrency prices move up. When some
celebrity notices some digital asset and names it on one’s Twitter, it also contributes to
cryptocurrency prices growth (everybody remembers the story about Elon Musk and the
DOGE coin). Another situation is when large crypto investors change prices artificially by
buying or selling crypto coins massively, shaking the market in on or another direction. Such
princesses are called “pumps” and “dumps,” and they are considered to be dishonest
actions. Whales investors create hype around an asset when they buy it, so its price
skyrockets to sell the assets at the peak price and collapse the market.

As we mentioned above, when a crypto platform is actively used, its crypto asset
grows in value. An example is the popular Solana coin.

Taking all the mentioned factors of crypto coin pricing, investors make a
comprehensive analysis to predict the future coin crypto price. Let’s see how they do that in
more detail.

How to Make Cryptocurrency Price Predictions?

Market research is crucial for successful investments and trading. Based on quality
analysis, traders understand what they will do next – hold coins, sell them out, or trade them,
and how they will trade them (long or short).

To draw thorough research, they take the following types of analysis:

● Technical research. Includes the analysis of crypto charts and finding historical
patterns and indicators, reasons why they repeat, and factors that could affect them.
At the same time, trade volume in different periods is analyzed. The information
received helps to understand if the same patterns can repeat and under what
conditions in the future. Actually, price charts give a lot of valuable information for
those who know how to read them.
● Fundamental research. Here the focus is not on crypto charts and price behavior but
on the reasons and factors that could affect it. These are external events, such as
inflation, wars, and different political decisions, that overall impact the world’s
economy, and we know that crypto is not a standalone industry – it is closely
connected with the entire economy and people’s ability to invest. This analysis helps
to understand what factors were under-evaluated and why in order to draw
conclusions and consider those factors next time.
● Analysis of investors’ sentiments. That is one of the important parts because relying
only on dry facts will never give results when it comes to investments. The human
factor should be considered a must. There can be different moods – panic selling
assets or hype around crypto coins and buying them in masses, etc. All these effects
public expectations about crypto coin pricing.

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Gathering the results of these analyses together, traders draw a conclusion on what
to do next – buy crypto, sell it, hold it, or trade it. There is also a quantitative analysis, which
includes the information taken from the previously done types of research and calculations
indicators that help traders estimate the future price of assets.

What are Crypto Prediction Markets

Looking at crypto charts, investors identify different forms of the graphs. Those forms
were sorted out and assembled in typical chart figures that indicate bearish and bullish
market trends.

Bull market patterns:

● Inverse hammer
● Hammer
● Morning star.
Bear trend patterns:
● Shooting star
● Hanging man.

An in-depth analysis of the patterns allows investors to suggest further price
movement, but it is never precise. There may always be unpredictable events that spur the
crypto market up or pull it down. So all the crypto forecasts are conditional and do not
exclude risks.

How to Buy and Sell Cryptocurrency for Profit?

To reach success in crypto trading, you should pick a strategy. There can be a daily
strategy or scalping, swing, or long-term investment. Adhering to a strategy helps traders be
consistent in their activity and avoid emotional decisions. Some tips on profitable trading:

● Do not spend your last money on crypto trading; otherwise, you will not be able to
make weighted decisions with a cool head.
● Invest no more than you can afford to lose.
● Add automated trading programs.
● Take profits and do not be guided by greed.
● Forget about missed opportunities – regrets about the past will spoil your trading
experience in the future.
● Better not take large leverage ratios – the more funds you borrow, the higher the
risks, and the more you lose in the end.
● Use reliable crypto platforms with a convenient interface.
● Store long-term investments offline and some part of the funds you trade every day –
on a crypto exchange.
● Do not forget a seed phrase to your crypto wallet.

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And the last recommendation on crypto price predictions. Remember that the crypto
market does not stand still – something new occurs every day. You already know what
impact the news background has on the crypto market, so you should always keep abreast
of the latest news from the industry and be aware of the crypto competition. To stay up-to-
date with the news and not miss up-and-coming crypto projects read the WhiteBIT blog,
communicate with like-minded people, discuss trading with friends, and share experiences.

Like in any business, communication, and interaction with like-minded people bring fruit.
You are always welcome in the WhiteBIT platform and community to develop an
increased awareness of this field.

We will be happy to hear your thoughts

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