Factors affecting the prices of cryptocurrencies PDF
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Added on 2021-11-19
Factors affecting the prices of cryptocurrencies PDF
Added on 2021-11-19
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FACTORS AFFECTING THE PRICES OF CRYPTOCURRENCIES 1 Cryptocurrencies: Factors affecting Cryptocurrency Prices When Trading Online Name Institution Date
FACTORS AFFECTING THE PRICES OF CRYPTOCURRENCIES 2 Cryptocurrencies: Factors affecting Cryptocurrency Prices When Trading Online Introduction Numerous trends are happening in the Modern-world resulting from the highly advanced technological innovations and desire to diversify job opportunities. One of the significant fields established from technological advancement is the use of cryptocurrency. The term cryptocurrency illustrates a token, purposefully invented for general or limited medium-of- exchange and issued through a cryptocurrency system. However, because of limited trust among individuals, a collectively maintained ledger that utilizes cryptography is used to curb trust issues. The invention of cryptocurrency has attracted online trading in which individuals speculated price movements through Contract for Difference (CFD) accounts (Pernice, 2021). Nonetheless, when trading, there are several factors that traders consider to ensure high profits. One of the significant factors they consider is the price of cryptocurrencies. Attention-grabber Cryptocurrency has evolved to be the biggest buzzword of the business market in recent years; blockchain-based technology is considerably rising and is estimated to cross over $2 billion in 2021. However, in recent years, individuals have devised ways of earning a significant amount of money through cryptocurrency trading without lifting a finger. Background or historical details, and significance of topic: The name cryptocurrency was first recognized in 2008 after the invention of bitcoin-a cryptocurrency that facilitated the connection of individuals through peer-to-peer digital platforms to issue and transfer digital tokens among themselves through a secure process facilitated by cryptography (Pernice, 2021). The peer-to-peer connections illustrate that there is no intervention from any financial system or government. The platform is a self-organized
FACTORS AFFECTING THE PRICES OF CRYPTOCURRENCIES 3 unified set of nodes, in which each node denotes a buyer or a seller. Moreover, after the invention of cryptocurrencies, there have been increasing online transactions and trading taking place all over the world. However, many individuals lose while trading because they do not know the market dynamics and price influencers. Thesis The increase in cryptocurrency trading requires an effective understanding of the crypto market and prices. This essay determines factors that influence the price of cryptocurrencies when trading. Main Point #1 Trading Volumes Trading volumes is one of the factors posited to affect the prices of cryptocurrencies. The trading volumes expressed in lot sizes affect the price of cryptocurrencies; for instance, individual trading using 1 lot size will either win or lose a higher amount than an individual trading using 0.01 lot size. The extensive research by Sovbetov (2018) denotes the significant effect of trading volume on the prices of cryptocurrencies. In the research, the increase in trading volumes increases Bitcoin, Ethereum, Litcoin, and Monero cryptocurrency market. Significantly, Poyser (2017) denotes that lot sizes hugely impact the price of cryptocurrencies in the crypto market by either raising or lowering the prices of cryptocurrencies. Moreover, the research by Gemici and Polat (2019) demonstrates the considerable impact of volume size on the prices of cryptocurrencies. According to Gemici and Polat (2019), there is a unilateral causality interrelation observed on negative shocks in Bitcoin prices to trade volume and also from the positive shocks in trade volume to price at 1%. Main Point #2
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