There has been a mixed bag of events in the cryptocurrency community recently, including the collapse of FTX, the shutdown of Silicon Valley Bank, SEC lawsuits, and the bankruptcy of Silvergate. Each positive or negative event has affected the price of cryptocurrencies. So, why is crypto going up today? There are many answers to this question.
Why is Crypto Going up?
Cryptocurrencies are usually not backed by a central institution. Since many of them don’t have government backing either, they are more susceptible to external factors that can affect their value. With this in part of the article, we looked at five different factors that can help answer the question, “Why is crypto going up today?”.
Supply and Demand
The primary factor that determines the value of cryptocurrency is the supply and demand curve. If demand grows faster than supply, the price of the currency increases. However, some tokens have a fixed supply limit, while others do not. Some currencies may even burn tokens to prevent the circulating supply from growing too much. As a result, as the utility of a currency increases, demand may also increase. This situation affects the value of that cryptocurrency.
Regulations
Governments have yet to find appropriate ways to control how cryptocurrencies are bought and sold. This situation causes cryptos to be perceived as a hazardous and volatile investment. Items like futures contracts or exchange-traded funds (ETFs) could improve their value by giving investors additional access.
Regulation may also make it possible for investors to use future contracts or options to bet against the value of cryptocurrencies, which could lessen the volatility of cryptocurrency prices. However, it can also result in a decline in price if a governing body alters the rules so that a cryptocurrency investment loses popularity or use.
Cryptocurrency Exchanges
Cryptocurrency exchanges are one of the biggest factors affecting the value of these currencies. While the most well-known ones, like BTC and ETH, are listed on almost every exchange, tokens like IOTA are not listed on every cryptocurrency exchange. This situation can limit access to the token in question because it is not listed on every exchange.
On the other hand, while this may not be the case for IOTA, if a cryptocurrency is traded on a smaller exchange, the amount the exchange will receive may be excessive for investors. However, if a currency is listed on multiple exchanges, demand may increase. The higher the demand, the higher the price.
Node Counts
The number of active wallets on the same network is called the node count. With node counts, you can easily find out the strength of the community. A stronger community requires a higher number of nodes. Moreover, a strong community ensures that any crisis in that cryptocurrency can be overcome faster.
There are two ways to find out how many nodes there are. The first is to visit the currency’s homepage. The second is to use various search engines, especially Google. Finally, if you compare a popular currency with a less popular one, you can effortlessly see how the number of nodes affects the price.
Competition
At least 13,000 different types of cryptocurrencies exist, and new ones are continually being introduced. While being simple to launch, they are challenging to sustain because a network of users for that cryptocurrency must be established.
On the other hand, if the blockchain has a use for the currency, it can swiftly grow a network, especially if it overcomes a competitor’s drawback. If a new competitor acquires traction, it will drive down the value of an established rival while raising the value of the new currency.
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