The world of cryptocurrencies is famous for its volatility and unpredictability. At one point, a little-known coin can cost a few cents, and in a week, it can grow tens or even hundreds of times. Why does this happen? Let's look at the key reasons why cryptocurrencies suddenly "shoot up".
1. The hype effect and the influence of social networks
Social media, especially Twitter, Reddit, and TikTok, play a huge role in popularizing cryptocurrencies. One post from an influential user or a celebrity mentioning a project can cause an avalanche of interest.
Example:
• Dogecoin: The coin started out as a joke, but after a series of tweets from Elon Musk, its value skyrocketed.
How does this work:
• Opinion leaders create buzz.
• Investors, fearing missing out on profits (FOMO effect), are buying the coin en masse.
• Demand exceeds supply and the price rises sharply.
2. Whale manipulations
Example strategy:
• Whales buy up a large portion of the asset, increasing the trading volume.
• The price is rising, which attracts small investors.
• Once a coin peaks, whales take profits, crashing the market
3. Listing on a major exchange
When a little-known project gets listed on exchanges like Binance or Coinbase, it automatically creates a surge of interest.
Reasons:
• Simplifies access for millions of users.
• Listing is perceived as an indicator of the reliability and prospects of the coin.
Example:
• Shiba Inu: After being added to Binance, the coin's price increased by hundreds of percent in just a few days.
4. Innovations and news about the project
Cryptocurrency projects often take off after launching new features or partnerships. For example:
• Implementation of smart contracts.
• Partnership with large corporations.
• Blockchain updates (hard forks).
Example:
• Ethereum: Every time there are network upgrades, the price of ETH changes significantly.
5. General market trend
When the market is in a bullish phase, even weak projects can suddenly rise in price. The effect is amplified if the asset is undercapitalized, making it more susceptible to sharp movements.
Example:
• In 2021, against the backdrop of massive growth in Bitcoin, thousands of “junk” tokens rose in price.
How do you know if a coin can “shoot”?
1. Trading volume analysis
A sharp jump in trading volumes without any apparent reason may be a signal of whale activity.
2. Activity on social networks
If a coin becomes popular in discussions, it may foretell growth.
3. News background
Stay up to date with news about partnerships, updates, or listings on major exchanges.
4. Technical analysis
Use charts and indicators to identify potential growth areas.
Conclusion
Unexpected spikes in cryptocurrency prices are a combination of market psychology, news coverage, and the actions of major players. However, sharp rises are often followed by equally sharp falls, so it is important to approach investments with a cool head and not invest more than you are prepared to lose.