Crypto currency values fluctuate quickly and are dependent on demand and supply. This makes them less stable than traditional investments. It is possible for a purchase of $1000 to plummet to $100 in minutes, or increase to $10,000 within a matter of hours. Even when you are holding a large amount of crypto, the value can change radically, causing you to lose money if you cash out.
While many cryptocurrency exchanges list their prices and give you an idea of where to buy, it is also helpful to monitor the news surrounding a cryptocurrency to understand how it will respond to positive and negative news. This is because positive news about the cryptocurrency can increase its value, while negative news can decrease its value. A central authority clampdown, for instance, can cause a cryptocurrency’s price to drop.
Cryptocurrency values are based on the market’s sentiment, as well as supply and demand. While they fluctuate in value, they tend to be more stable if the market cap is higher. To calculate the market cap, you need to multiply the price of a coin by the number of coins in circulation. The more coins in circulation, the higher the market cap is.
While there is no clear forecast for crypto currency values, some analysts have predicted that bitcoin will reach $1 million by 2023. Others, however, are less optimistic. Crypto enthusiasts predict that Bitcoin could reach $250,000 by 2023. Even big financial institutions are making predictions, with JPMorgan predicting a long-term high of $146,000 by 2023. Bloomberg also predicts that the price of Bitcoin will hit $400,000 in 2022. Because this technology is so new, predictions about its value are mostly informed speculations.
Online crime has been an important driver of crypto currency values. Initial rises were driven largely by Dark Web transactions for drugs, ransomware attacks, and money laundering for criminal enterprises. Since then, criminals have increasingly targeted the burgeoning virtual currency ecosystem. They illicitly generate currency, steal currency from exchanges, and target wallets. They also used the new digital currency as a means of extortion.
Like stocks, crypto currency values fluctuate on a daily or weekly basis. This makes it easy to compare cryptos in different ways. Each cryptocurrency has a unique market cap that corresponds to the amount of assets in its supply. In this way, it is easier to compare different cryptos to other digital assets.
In early 2017, bitcoin broke the $1 mark and entered its first mini-bull run, rising over three months to more than $1,000. However, after the SEC denied a Bitcoin ETF, the price dropped sharply to $2,000. Towards the end of the year, the cryptocurrency market cap reached a low of $150 billion.