Cryptocurrency exchange rates are the most important information for every active or would-be investor. Unlike the stable price fluctuations of resources such as precious metals - gold, silver or platinum, cryptocurrencies are characterised by volatility and huge dynamics.
Those interested in buying cryptocurrencies should keep an eye on the market - but what about active investors who have filled their investment portfolios to the brim with cryptocurrencies? Should they also follow the market? It depends. There are different schools of thought on how to watch the bourse. One of the most popular says to assume in advance the profit you want to make on your investment, set up an automatic sale, and then forget about the portfolio - so as not to waste time and nerves.
Insightful analysis is the cornerstone of this type of trader, by having faith in his skills, the advanced trader has no need to constantly review the odds - after all, he has set up automatic selling for the worst and best case scenarios.
If you haven't invested in cryptocurrencies before, you're probably wondering...
Cryptocurrencies - what are they?
Cryptocurrencies are virtual money that are both a means of payment, exchangeable for goods and services on the internet, but also an asset, tempting investors with their enormous volatility and ability to multiply the price in just a few moments.
In addition to this, cryptocurrencies are also a disruptive technology that not only has the potential to replace traditional money, but also to bring a massive technological legacy to many sectors - starting with the obvious IT and ending with the seemingly exotic (for virtual money) such as medicine or education.
How do cryptocurrencies work?
Cryptocurrencies - digital money - are overwhelmingly based on decentralised Blockchain network. This is not the rule, as there are already projects such as IOTA that are based on completely new solutions - the IOTA in question relies on Tangle, a mechanism that is not based on Nodes, but on transactions that confirm each other.
IOTA is still an exotic in the cryptocurrency world, far more advanced than Bitcoin and its blockchain, so it is on the basis of Bitcoin that it is easiest to build an overall picture of cryptocurrencies.
As we have already established - cryptocurrencies are based on a decentralised network - which is actually what?
The network in question does not have an overarching entity - a bank or institution that would take care of the security of funds or their transfer from one account to another. In the BTC network we have decentralised nodes (the aforementioned Nodes), which communicate in the Peer-to-Peer model. Each node has equal rights and equal weight, which significantly increases the security level of the bitcoin blockchain.
Transactions in such a network take place directly between buyer and seller - no overarching authority. In the case of Bitcoin, transactions made by users of the network must be confirmed by a pair of different nodes. Confirmations can be understood as a mechanism that proves that the funds that are currently being spent (transferred) by a user actually belong to them.
In this way, the Bitcoin network is completely free of the problem of double spending, or undoing transactions. You've probably already noticed some...
Advantages of cryptocurrencies - a major component of popularity
Cryptocurrencies are loved by millions around the world, but why do people invest their money in digital assets and want them in their wallets?
- Many proponents of cryptocurrencies see them as a real means of payment that could displace traditional money in the near future;
- The fact of decentralisation is also a huge advantage. Transactions in cryptocurrencies are impossible to stop or undo by a superior authority - after all, one does not exist in this world;
- Others are attracted by the anonymity and the impossibility of linking virtual funds to a specific person. The funds can of course be traced, but instead of a column with the name of the holder we only see the address of the wallet where the funds are located;
- Many cryptocurrencies carry truly disruptive technologies, not only for finance, but also for industries such as insurance, education or medicine, but also politics and modern voting systems based precisely on cryptocurrency solutions;
- There is also a multitude of investors for whom the opportunity to make money is the most important factor. The exchange rate of digital assets is very dynamic, which makes it a gluttonous morsel for many investors who are looking for both short-term and long-term assets.
What influences the price of cryptocurrencies?
As you already know, an essential feature of cryptocurrencies is the large fluctuations in their value, but have you ever wondered what affects their price? Below you will find some factors that will help you understand their fluctuations.
Demand and supply
This is one of the main factors influencing cryptocurrency valuations in the market. The higher the demand and lower the supply, the more the price increases, and vice versa - lower demand and higher supply means a lower price. Interestingly, unlike fiat (traditional) currencies, cryptocurrencies have a pre-limited supply - for example, the supply of Bitcoin is pre-limited to 21 million units of the currency.
The limited amount of currency may in the future result in the demand for cryptocurrencies being far greater than the amount available, which will have a colossal impact on the price of digital assets.
Cryptocurrencies, like the food in our fridges, do not come from nowhere. Miners, who use specialised equipment and software, are responsible for acquiring digital currencies. The digging process gets more difficult with more miners, which translates into higher mining prices, which translates into price.
Miners, are rewarded for digging up (confirming) a block full of data - most often including transaction information. If you want to find out more about this, be sure to check out the article on cryptocurrency mining on our website.
Rules and regulations
A very important factor is the regulations put in place by local governments - some may be positive, others a little less so - but one on a par with the other has a colossal impact on the course.
Recently, we had to deal with a situation that perfectly illustrates this example - the regulations of the Chinese government. Bans on digging cryptocurrencies coming into force in subsequent Chinese provinces caused a situation in which the course of the cryptocurrency market changed dramatically.
In just a few days, during which the world received information about the closure of more cryptocurrency farms, the price of bitcoin, but also many other cryptocurrencies fell by tens of percent (in the case of Bitcoin it is even said to be half the value).
Remember, however, that laws can also have a positive effect on the digital currency market, resulting in a significant increase in value - not unlike the appearance on the internet of news that bitcoin has been accepted by Salvador, and plans to adapt BTC as an official means of payment.
The power of the media
The media. They are often referred to as the fourth power - who else but them creates collective consciousness? It is the media that is responsible for the mood of the cryptocurrency market and indirectly responsible for the odds. The way the media can convey information about cryptocurrencies is significant - it is not about the quality of the service and coverage, but the emotional charge in which the information is clothed.
Good news will easily translate into increases in the market - it can even create a buying frenzy and FOMO! But what if an article about the end of cryptocurrencies or the end of the bull market of any market appears on the internet, on a well-known and widely read site? Investors, especially the less experienced ones will react in a flash - usually by selling off their assets, leading to a sudden drop in value.
Of course, the media can take a positive turn, even advocate for cryptocurrencies. It is enough not to create panic by building catchy news stories, but to educate and provide knowledge about cryptocurrencies, which are after all full of positive aspects and uplifting information.
There is no need for extremes like hyperinflation, just a drastic reduction in interest rates or a slight increase in inflation that qualifies as galloping is enough for people to lose confidence in governments and fiat money.
We have recently had an opportunity to observe this. During COVID-19, countries pursued aggressive policies, using many out-of-the-box strategies, which translated immensely into rising inflation and loss of life savings for many citizens. An alternative that can save us from such phenomena is cryptocurrencies - a completely independent asset from fiat money.
When we compare Bitcoin with traditional national money and compare their inflation rates, we find that for BTC the inflation rate is only 1.7% - and it will continue to decrease. And what about the competition in the form of PLN, USD or EUR?
Well, they are respectively: for the zloty 4.4%, for the euro 2.0% and for the dollar 5.4%.
Is it safe to invest in cryptocurrencies?
The exchange rates of digital currencies can surprise us by constantly increasing in value over time, but despite this, many investors still see them more as a speculative measure and a kind of bet than a real investment. What is the reason for this?
Cryptocurrencies don't generate value on their own - for you to make money, someone else has to pay more for them than you do.
The young age of the market and assets, crawling legal solutions, price fluctuations - these are facts that many may find perplexing. Investing in coins is high risk and we definitely do not recommend investing more than you can lose. Digital currencies can be a great way to multiply your savings, but before you invest, do some thorough research and decide for yourself if it's worth investing.
An important aspect of investment security is a proven place where you can invest your funds without fear - exchanges have collapsed more than once - so you need a safe place to invest, and the BitClude cryptocurrency exchange is just that - safe and secure.
Follow our quotes for coins such as BTC, ETH, LTC or XRP and then buy one of these and become an investor for the 21st century!
For which pairs should I check the exchange rate? BTC PLN or BTC USD?
It all depends on what currency you are investing in - if you are investing in PLN, it is easier to check the exchange rate for the pair with PLN - you will find it easier to find the optimal moment to sell or buy stocks. If you are investing in dollars or euros it is best to check current valuations in the currency you are investing in.
Remember that the price varies even between exchanges!
Use the information from the exchange where you bought your coins. The exchange rate of Doge, Bitcoin or Ethereum may differ from one exchange to another - therefore, make your investments and check the exchange rate of one exchange - the risk of mistake will be minimal and you will not be exposed to losses associated with incorrect information.
How do you predict the price of cryptocurrencies?
Predicting the price of digital currencies may bring to mind fortune telling, but there are traders who have their own ways of predicting prices. In our case, it's important to know the various events related to cryptocurrencies - knowing each one is an advantage over other investors, but also an indicator of what to expect.
In the case of Bitcoin, halving events that brought us new records of BTC value no more than a year after occurrence are already cyclical. For ETH, such an event was the transition from Proof-of-Work to Proof-of-Stake.
Every piece of information counts - the road maps of the creators of a given cryptocurrency, the possibility of forks, changes in regulation, changes in the price of electricity or equipment used for digging - all sorts of data that allow us to estimate what will happen to the exchange rate - will it rise or fall.
Another option is to do some analysis of the price, based on which you can draw conclusions and invest, or wait to buy until a better moment. If you want to read about the course analyses, Be sure to check out our article on the subject.
How to buy cryptocurrencies?
There are many ways to come into possession of digital currencies - you can buy a sample Bitcoin on an exchange or cryptocurrency exchange, but you can also buy it from a third party, or invest in Bitcoin digging equipment and start acquiring it without intermediaries. By far the easiest way is to buy said Bitcoin from a trusted place, but how do you find one?
How to choose a cryptocurrency exchange?
Choosing such a place is often not a simple subject - it all depends on your needs, but also on the goal you wish to achieve. An investor looking for an exchange where CFDs based on cryptocurrencies are available will certainly not choose a cryptocurrency exchange - after all, there are no CFDs on such exchanges.
The user is determined and determined - they don't want contracts, they want digital currencies, what should they choose?
An important element is the legal status of the exchange - the exchange you choose should have a license, or a proven track record of cooperation with the government of a given country. Exchanges that cooperate with governments, undergo their checks and audits are a very safe place to store funds and make purchases - the risk then drops to zero.
Security is of course paramount, but one important piece of this puzzle is also the exchange itself - its interface (which should be simple and intuitive) - but also the internal AML procedures.
How to choose a cryptocurrency exchange?
At BitClude we pride ourselves on express registration and identity verification - from entering the site, through registration to cryptocurrency purchase does not even take 3 minutes! A simple and intuitive interface means ease of trading, and being legally empowered through cooperation with the Financial Supervision Commission, ensures the safety of your funds.
We use advanced customer support tools, so our support department is always there for you.
We focus on proven and safe solutions, which is why on our exchange you will find certain cryptocurrencies that eliminate the risk of investment - Bitcoin, Litecoin, Ethereum and Ripple are coins that have already permanently entered the world of cryptocurrencies.
With BitClude you will always reach your destination!
You already know that cryptocurrencies are high-tech means of payment, but also investment assets. It's not just Bitcoin or Ethereum, but also newer and lesser-known projects like IOTA, EOS or Wave. It is up to you to decide in which cryptocurrency you will invest your money, so before making any decision, do a thorough research and invest only the money you can lose.
Conduct an analysis of the cryptocurrency you want to invest in, then get on BitClude and fulfill your dreams of becoming a 21st century investor!
Start your trading journey right here!
...or just keep calculating prices
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