Cryptocurrency has been around for a while, yet it still feels like the wild west of finance-price swings, overnight millionaires, and new coins popping up like mushrooms after the rain. In early 2024, Bitcoin lost a jaw-dropping $120 billion in market value in just one day, while Shiba Inu shot up by over 20% after a celebrity endorsement.

With all this chaos, one question remains: Can you actually predict where crypto prices are headed? Well… yes and no. Some traditional financial principles apply, but crypto also dances to its own beat.
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What moves crypto prices?

Let’s break it down:
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Supply and demand-the classic tug-of-war

Just like your favorite sneakers selling out and then doubling in price on resale sites, cryptocurrencies follow the simple rule of supply and demand. If there are more buyers than sellers, the price goes up. If everyone’s selling and no one's buying, prices drop. It’s that simple.
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Cost of production-why mining matters

Mining isn’t just a fun word for digging up treasure-it’s how many cryptocurrencies, like Bitcoin, are created. Miners use powerful computers and loads of electricity to verify transactions and secure the network. But here’s the catch: mining only makes sense if the reward (aka, the cryptocurrency) is worth more than the cost of mining it. If prices dip too low, miners may call it quits, reducing supply and potentially causing prices to rise again.
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Competition-the crypto arena

Crypto is a crowded space. New coins launch daily, some promising to be the “next Bitcoin” (spoiler: most aren’t). If traders think a new coin has potential, they might move their money there, pulling demand away from established giants like Bitcoin and Ethereum. This constant battle for attention can lead to price swings across the market.
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Market sentiment-the mood swings of crypto

Markets have feelings too. When investors feel confident, they buy more crypto, pushing prices up. But when fear creeps in-maybe due to inflation, bad economic news, or a market crash-investors tend to run for safer assets like gold or the US dollar, leaving crypto prices to tumble.
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Crypto-specific factors
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Where you can buy it-the exchange effect

A cryptocurrency’s availability on major exchanges plays a huge role in its demand. Popular coins are easy to buy and sell, but if a coin is only available on a niche exchange, trading it becomes expensive and inconvenient. That extra hassle can discourage traders and keep prices lower than they could be.
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Speculation & hype-the power of the internet

Crypto prices are often driven by hype. A single tweet from a high-profile influencer can send a coin skyrocketing or crashing. Social media, forums, and news articles shape public perception, making speculation one of the strongest forces in the crypto world.
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Government regulations-the rulebook is being written

Governments are still figuring out how to regulate crypto, and every new law or restriction can shake up the market. When a country announces a crackdown or a new tax on crypto transactions, prices tend to react immediately.
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If you are interested in developing your crypto trading skills, practice with a demo account’s virtual funds and keep these factors in mind before you trade with real money.