Two Factors that influence the Price of CRYPTO ‼️
1. Market Sentiment
Risk asset markets are heavily influenced by two human emotions – fear and greed. Positive news about cryptocurrencies can trigger a bullish trend as investors speculate on future profits. Endorsements from celebrities like Elon Musk as well as well-known brands like Meta (META) and Disney (DIS) helped drive the token price surge.
On the other hand, negative news regarding a crypto project or sector can trigger fear in the market. Risk aversion can encourage investors to dump their tokens at the first sight of trouble, thereby increasing market volatility.
You can check the Crypto Fear & Greed Index to analyze and generalize the current market sentiment. Extreme fear can indicate an oversold market, indicating that a bottom may be imminent, while extreme greed can indicate an overbought market, indicating that a crypto price drop may be next.
Keep in mind that markets are volatile and these tools are not always appropriate. It is recommended to conduct thorough research, seek the advice of a qualified financial advisor, and consider one's risk tolerance and financial situation before making any investment.
2. Crypto Whales
A crypto whale is someone who has a lot of cryptocurrency. If they have enough money, their trades can impact the entire market. There are whales for all types of assets, including BTC, ETH, DOGE, and even NFTs.
Buying or selling large amounts of tokens can result in massive price swings in either direction. This is further strengthened due to the transparent nature of blockchain.
Crypto participants often track whale activity to try to predict short-term and long-term price trends. They may even consider whale trading as their investment strategy.