Cryptocurrency Liquidity


Cryptocurrency Explained

Supply and Demand Are Still Important

There are many factors that have weight on cryptocurrency pricing. One of the largest factors that impact cryptocurrency value is the basic principle of supply and demand. Please note that in terms of an exchange medium, cryptocurrency is relatively new in the public marketplace. As with many things that are unique, when there is newness, awareness or popularity of the product will naturally be low. To add to this, at launch, cryptocurrency did not have many similar means of reference for people to gain understanding and comfort with the asset. So it went that closer to its initial creation date the demand to invest in cryptocurrency was low. With small demand, pricing was relatively inexpensive. Over time, cryptocurrency’s history and stability has grown. Additionally the asset's familiarity and popularity continues growing. With public increased asset confidence, investor demand and competition are putting some strain on supply. Consequently, pricing has and continues gradually increasing.

PriceVolume (24h)Change
Bitcoin$6 345$3 410 520+0.4%
Ethereum$435.65$1 418 630 000+1.3%
Dash$229.19$153 088 000-0.9%
Litecoin$80.53$283 573 000+2.2%
Monero$127.35$41 956 900+3.75%
Steem$1.26$902 686-2.88%

The Regulation Ecosystem

Another large cryptocurrency pricing influencer is the regulatory environment’s actions around and with the currency. When regulators put laws in place that restrict or permit industry-wide, cryptocurrency use or specific rules in place that restrict, limit or open how the money can be utilized, it impacts the foreseen money’s usability and value. More specifically, when regulators restrict or reduce the use of this asset it will almost certainly negatively impact the currency’s value and pricing. On the other hand, when regulators open up the use of the asset it will very likely positively impact the currency’s value and pricing. It should also be noted that even publications around the mere speculation with these will likely have very similar value and pricing effects on the currency.

The Media's Influence

Hence, an additional affector on cryptocurrency value and pricing is the media news surrounding the currency. Yet, it is not just discussion around regulation. When the media publishes articles with hype about, concern for, uses of, important figures’ perspectives on various cryptocurrencies or the crypto-industry in general, it has an impact on the asset’s value and pricing.

To illustrate how publicity over hype can impact the currency’s value and price, in 2017 there was already natural growing public interest in investing in cryptocurrency as an alternative asset. When media outlets began discussing the increasing interest it created a compounding effect. Floods of investors began contending to purchase more and more of the most popular instruments (namely Bitcoin) which led to a record increase in cryptocurrency’s pricing.

To provide insight into how media coverage about the concern for cryptocurrency impacts its value and pricing, in mid 2019 the media published a lot of material over the government’s focus on cryptocurrency’s troubles. The publications put a limelight on the downsides to cryptocurrency’s use as well as questioned the currency’s mere substantiation. Naturally, cryptocurrency value and pricing took a hit.

A demonstration of how media publications over the uses of cryptocurrency can influence its value and pricing, at the end of 2019 the media publicized how use of cryptocurrency can work similarly to the SWIFT banking network. As a result, cryptocurrency value and pricing rose alongside it receiving praise and additional investments.

An example of how media publications with important figures can impact the currency is when the media publishes a famous celebrity’s open support for a cryptocurrency. In 2014, when Bill Gates openly supported and invested in BitCoin its underlying value and price increased.


Availability on Trading Platforms

Another factor affecting the value of cryptocurrency is its availability for trading on different exchange platforms. The greater the availability of a particular currency on different exchange platforms, the more people will be exposed to it and begin investing in the money.

Ultimately, many factors affect the value seen in cryptocurrency. These factors cause short as well as long term impacts to the currencies’ prices.

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