Factors affecting the price of virtual currency

2017 is the year when we see virtual currencies fluctuate dramatically in daily pricing. Although over the past year the core trajectory o...

2017 is the year when we see virtual currencies fluctuate dramatically in daily pricing. Although over the past year the core trajectory of virtual currency has been increasing, the market is still vulnerable to unpredictable and sometimes volatile prices.
This article does not contain any investment advice or recommendations. Every step of the way involves the risk, you should carefully study your plan before making a decision.Some of the fluctuations may be that the present virtual currency model is formed by deflationary nature and that most of these currencies are used to invest or be considered as speculative assets. There are also external factors that drive up prices.As the increasing attention to Bitcoin along with the impact of contemporary digital has helped increase the value of virtual coins. The rapid increase in value has led to the widespread participation of retail investors in the virtual currency industry. However, it also focuses the attention of governments and international organizations. This may be a factor that plays an important role in this volatility.While regulators are always on the defensive when it comes to regulation, the value of virtual currencies remains tied to the speculation and optimism of investors. For this reason, policy changes only have a large impact on the short term.However, some of the regulations have long-term implications, which are dangerous. These regulations may help the market to be more stable in the future, but many questions are raised about how effective it will be and how it will affect future prices. .Why regulations affect price?The initial boom of virtual currency has occurred in an uncontrolled environment. Even when investors are interested in this market, managers and governments have not done anything, and prices continue to skyrocket.
Governments and governments are taking steps to stabilize the virtual currency market by 2017.This trend is largely reflected in the explosive growth of ICO-sponsored capital that many Blockchain companies achieved last year. In 2017, Blockchain's new companies earned $ 4 billion in funding, a huge amount of funding for a project. Shortly thereafter, managers such as the Securities and Exchange Commission began investigating. In the end, many virtual capital mobilization has been hijacked, and the capital of some ICOs is not as huge as the information the companies offer.Hartej Sawhney, co-founder of Hosho, a smart accounting and auditing firm, said:

There is currently no regulatory authority to enforce standards for companies in the Blockchain ecosystem. The number of attacks on the system and successful data theft also shows the security weaknesses of many companies and trading floors, but they are overlooked due to lack of regulation, which is a weak point. Big impact on the price of virtual currency.
Exquisite projects in the Blockchain ecosystem will only be supported more strongly by investors and trading floors when developing in a regulatory environment.
Clarity of the law is always good. Gibraltar is a typical example of a country that has views on blockchain adjustments, so companies around the globe are flocking to follow.

Due to the decentralized nature and the lack of power structure inherent in the virtual currency world, many view regulation as a tactic that can cause explosive price growth and reduced volatility in the industry. this industry.
Market reaction:This is a market in which news, speculation, regulations from regulators or the rush to sell - buy coin from investors leads to tremendous fluctuations in this or that. Different ways. For example, Bitcoin spent nearly half its value last month when Coinbase launched an internal investigation into its employees' fraud and manipulation practices.
Or recently, most virtual currency prices have fallen dramatically after the South Korean government announced they would ban virtual currency trading or at least implement strict controls on the market.
As a result, Bitcoin slipped by more than 15%, while Ethereum, Ripple, Litecoin and most other large coin lost two digits in total market capitalization in just a few hours.
But not all regulations lead to negative volatility. After the Korean government changed its policy and made a more positive statement, the virtual currency quickly reversed the situation and created a significant upward momentum.
Earlier, the replacement of the yen by the yen played important roles on major Asian exchanges also helped push up Bitcoin prices.
After dropping to nearly $ 3,000 after the Chinese ban in September, the price has risen to 5,855 up to 96%. In addition, the country's legalization of Bitcoin as a payment method also contributes to a virtual currency boom in Asia.
Aviya Arika, Head of Blockchain Development at Porat Law Firm, noted:

Contrary to your thinking, regulations are really the driving force for rising currency prices. But regulatory uncertainty, as well as government bans, are a bad thing for the market.When an investor is unsure as to how they will be taxed by selling their coin or the legitimacy of using virtual currency, they will most likely stay away from it or just bring the coin up for sale. until new notice. These behaviors lead to the decline of the market.However, as authorities detect this problem and fix it, investors will feel more secure about how they can use virtual currency, whether it is a transactional medium, a financial instruments or any other form.In general, I think that when many legal entities regulate and clarify the legal status of virtual currency, the market will become more stable and widely applied.

In addition, the introduction of virtual currency into the mainstream investment has proved to be quite invasive. When the Chicago Board Options Exchange announced that it would start offering Bitcoin futures, the exchange had to suspend operations three times in six days after prices were pushed too far away, triggering the scene. newspapers and downtime.
In general, the psychology of users still want to keep their coin and hesitate before the divergence of prices from real property such as gold. This means that speculative actions and coping behaviors will continue to have a significant impact on price volatility.Long-term ambiguity:Even with the growing attention to this industry, virtual currency is still a mystery to many financial observers who are trying to predict prices. Despite its nearly 10-year existence, the virtual currency industry is still a nascent industry. Managers have recently begun to think of ways to limit some of the dangerous behaviors that this market is experiencing, but this has encountered "gusts."Most people are aware that Blockchain - the platform technology that supports the common features of virtual currency - is an important component in the future, but broad market regulation is also a challenge. with blockchain.In addition, the ICO is a serious concern for governments and managers because of their vulnerability to theft, hacking, hacking and other unethical practices.Industry youth also make it difficult to measure the long-term impact of regulations. Even after the biggest price fluctuations, Bitcoin can adjust itself as well as most other virtual currencies. Regulations will have real effect globally, but prospects for the future remain vague.2018 will be an important measure of how regulations will affect the virtual currency market. In the meantime, investors should always be cautious when reviewing regulations to come up with short-term solutions while offering long-term investment strategies.