Cryptocurrency is the most discussed topic on the Internet today. The only thing that makes people fear cryptocurrencies is that they are very unstable. The price of a cryptocurrency can be very high, and in one instant, in the same way, it can dramatically lose value, which can significantly affect the deterioration of your financial situation.

There are many factors that determine the price of cryptocurrencies:

Supply / demand ratio

Cost of electricity

Mining difficulty level

Technology

Addiction to each other

Government policy

Supply / demand ratio:

One of the main factors affecting the price of cryptocurrencies is the ratio of supply and demand. As in the market for other goods, if the supply remains constant, and demand increases, then the price of goods increases. Similarly, an increase in demand for cryptocurrencies increases their prices, and with an increase in supply and a decrease in demand, prices decrease. This factor affects prices the most.

Electricity Cost:

As we all know, cryptocurrencies are mined. The extraction of cryptocurrency requires constant and uninterrupted operation of computers, and to obtain profit from mining requires a lot of computing power. The greater the power, the greater the energy used. The cost of energy also affects cryptocurrency prices. Therefore, many mining pools install their equipment in areas with low temperatures, significantly reducing energy costs.

Mining difficulty level:

The level of complexity is another important factor that affects the price of cryptocurrencies. The more difficult the level, the more difficult it is to mine, the more energy is needed for mining, so the level of complexity increases the prices of cryptocurrencies.

Technology:

The key factor determining the price of cryptocurrencies is their usefulness. If as a thing that cannot be used anywhere, it will not have any or very little value. Therefore, if you can use this currency to buy things or spend in certain places, then this automatically spurs the currency to growth. As we see in the case of Bitcoin. There are many places to use it, so the price is constantly growing.

Dependence on each other:

Cryptocurrency prices depend on each other. If we talk about the current scenario, then Bitcoin leads. If Bitcoin’s price rises, then it affects other cryptocurrencies, and vice versa. Each cryptocurrency depends on each other. In some cases, bitcoin prices affect other cryptocurrencies, such as Ethereum.

Government policy:

The government of any country affects the value of Cryptocurrencies. As we all know, Cryptocurrencies are a good way to hide assets from the government. If the government is strict in the form of taxes, people will buy cryptocurrency in order to hide their assets, which will affect the prices of Cryptocurrencies.