The cryptocurrency market, as we all very well know, is a volatile field. Price shifts happen each minute, if not second, and traders and investors need to react quickly to put off negative effects if there are any.
This volatility can be explained by the fact that cryptocurrencies are decentralized. To put in simpler terms, their price cannot be directly influenced by governmental officials and financial authorities. The crypto assets are financial investment goods and their price is solely determined by the supply and demand of each. There are some underlying factors for the price formation but the strongest drivers of the changes are supply and demand.
Why Do Supply & Demand Matter So Much?
These two concepts form an economic model that exemplifies price determination in a given market. Even though this is mainly a microeconomic model, it can apply to global industries independently. Let’s take a better look at why they influence the price of Bitcoin and the rest of the Altcoins so heavily.
- ● Cryptocurrency Supply – you need to keep in mind two things. First of all, the units of cryptocurrencies are limited. They can either be mined into circulation or are kept by the creators and released regularly. Either way, there is a fixed amount of units that can come into circulation. The second thing to remember, is that people can also supply crypto coins. When they sell those bought beforehand, they increase the circulation supply.
- ● Cryptocurrency Demand – this concept shows what is the interest people have in the different cryptocurrencies. Demand meets supply at a given cross-point and this leads to a couple of things.
The supply and demand model will always try to move into an equilibrium position. This equilibrium is defined by a price on which the quantity demanded equals the quantity supplied. That is why when supply is higher than demand, the price will decrease in order to bring the two into an equilibrium by increasing demand. And vice versa, when demand is higher than supply, the price will move in a downward trend in order to help quantity demanded meet quantity supplied.
When we consider these things, along with the limited overall supply and the huge demand for crypto in the past two years, it is understandable why the price of the Bitcoin will stabilize at high levels. It is currently the most expensive cryptocurrency in means of price per unit in the market.
What Does All This Imply For Traders?
Traders’ behavior can be anticipated but is often unpredictable. Many online investors join the industry through a cryptocurrency exchange platform with speculative purposes. This can lead to sharp unexpected changes in both directions of the price of Bitcoin.
To act accordingly, you need to closely monitor the price movements. There are several trustworthy websites you can visit regularly in order to follow the Bitcoin price graph closely. These graphs or charts contain invaluable information that is up-to-date and often – real time, and can greatly help you in your investment decisions.
There are several things you can monitor on a price graph:
- ● The most current price in fiat money;
- ● The historical movements the price has made;
- ● The change in the last 24 hours or a time-period of your choice;
- ● The volume traded over a certain period of time;
- ● How the market cap of the currency moves, as well as the circulating supply;
- ● On which exchanges were the biggest transactions.
By monitoring all of these factors, you can get a good idea of how traded volume and price affect each other. Another thing is that these factors can give you some idea of what is the traders’ behavior, their expectations, and even their intentions.
These are situational analyses that might be hard for some people to make and newbies might outright just guess randomly what is going to happen. If you browse the web, you can discover the analyses of other people, find assistance with the help of investment systems and tools. It is all about learning and understanding the inner-workings of the industry.
What Happens When There are No More Units?
The maximum supply of Bitcoin is 21 million units. So far, there are more than 17 million units in circulation that can be bought and sold. When you look at the numbers and how much has been mined since 2009, you would probably think that the maximum supply will be exhausted soon enough.
The truth is a bit different. New Bitcoin units are issued for the creation of each block. In 2009 the amount was 50 units per block. This amount was to be halved every 210,000 blocks of the chain (or every 4 years) and today the reward is 12.5 units of newly created bitcoins, which get into circulation. This is a sort of a reward for those who carry out the operations necessary for the creations of records in the ledger.
It has been estimated that the reward will reach zero and the whole maximum supply will be released into circulation around the year 2140. The year 2140 is extremely far in the future.
Did You Know
John Maynard Keynes, one of the biggest names in the history of macroeconomics, have said the famous line ‘In the long run we are all dead’. We can speculate as much as we like but we will not live to see the maximum supply of Bitcoin go in circulation. Our heirs might. And still, there is a lot of time until that happens. Given the speed at which the industry develops, many things can change. Today, this year, in the next ten. The attention this industry has gained spiked incredibly in just the past two years. Only time will tell what will happen next.
Can a Bitcoin Price Graph Help With Forecasts?
You need to learn how to read the graphs if you are serious about joining the cryptocurrency industry. Even if it is not the Bitcoin, all Altcoins have such graphs that provide invaluable information for your investment intentions.
If you are a newbie, don’t be worried. There are enough tools, solutions, and platforms that provide adequate and timely assistance. As you spend more time in the industry, you will become better and better at reading the price graphs. All you need is motivation to learn.
Information is Key to Success!
As I already mentioned, you can find such graphs on many sites. Just find those that suit your needs, meet your expectations, and you can be sure they are trustworthy. Cryptocurrency exchanges also give on their trading platforms information about the price movements of an asset.
The thing here you need to remember is that you should not just join any cryptocurrency exchange out there and blindly rely on the information you receive. Always investigate whether you are joining an authentic source of both information and investment opportunities. Scam platforms are known for providing false information in order to mislead traders and force them to deplete their accounts. Stay safe and don’t rush into the first opportunity presented in front of you.
The cryptocurrency world is vast, we have not seen the last of it. But it is also volatile. Only you can ensure your personal success and you should not cut corners.
Hello, I am Collin Tyusm. I am a Forex blogger. I have created my blog, because I want to help people learn more about Forex & CFD Trading Software and Bots.