Who Sets Cryptocurrency Prices?

Cryptocurrencies are traded assets similar to stocks and commodities. Due to the high volatility of crypto coins, they are considered a more attractive investment option than traditional markets. However, it is also why the crypto market is the riskiest among others.

Who sets crypto prices? The fact is that the crypto space is free of governmental power. It is impossible to make an order to print more currencies or cut the supply in central banks – the emission of digital assets has nothing to do with governments – it is laid in their algorithms at the stage of development. Crypto supply can be limited or unlimited. It is evident that endless supply decreases the demand for coins and vice versa; limited emission helps maintain the price of digital assets.

Do any Governmental Establishments have an Impact on Crypto Rates?

Even though states cannot affect crypto, some establishments affect the crypto market indirectly. That is connected with the global economy, which impacts every sphere of business and markets – both traditional and crypto. For example, when the FED decided to increase rates (to help the economy suffering from inflation), it reduced the people’s desire to invest in risky assets in general, causing a drop in the crypto market.

Another case is when the government bans crypto mining or imposes restrictions on crypto platforms at the state level, as happened in China. It caused the outflow of miners from the region and reduced the BTC crypto currency price on Chinese exchanges.

What Does Crypto Market Price Depend On?

Similarly to traditional markets, the relations between supply and demand play a crucial role in price formation. If an asset is attractive to investors and they buy it actively without further selling, it supports the demand for the asset and reduces the supply. Highly valuable crypto assets have a high market cap and trade volume. They are usually technologically rich and have real applications. 

Other factors that drive crypto price:

• The trend in the market
• Investors’ sentiment
• Competition.

The list of cryptocurrencies prices can be found on the Coinmarketcap website, or if you want to trade and invest, use the WhiteBIT exchange.