Our crypto currency forecast: That's why crypto rates will rise!
Have you ever had the feeling that crypto currency prices rise and fall for no apparent reason? The factors that influence the prices of crypto currencies are not only important, but can also be used for profit. We will examine the key factors that drive crypto prices in the marketplace and share the strategies we use to profit from them.
Reason 1: Stock exchange services
Price increases for crypto currencies are mainly driven by the laws of supply and demand. Put simply, the more people that can access a crypto currency, the higher the demand and the price. Yes, emotions like hype play a role in the demand for a crypto currency. However, we have to accept that most people do not like to create new accounts at unknown exchanges in order to get access to a new crypto currency. What do most investors do? They wait until the new crypto currency is listed on a stock exchange where they already have an account and buy later.
Since crypto currencies are just coming out of their initial coinage, most of them do not immediately get a large stock exchange listing. Instead, these cryptos are usually listed first on smaller exchanges and later on larger exchanges like Binance. If we take Holochain as a study: It first came out of the ICO and was publicly traded 18 days before this article was published. Since the beginning of public trading, HOLO has been listed on 4 different exchanges: IDEX, Hotbit, Fatbtc and Radar Relay. How many of these crypto exchanges have you ever heard of? It is likely that you have not heard of any exchange.
In crypto-currencies it depends on the confidence of the stock exchange. Many veterans in the crypto-currency markets have lost a lot of money because of unknown stock exchange. An example of this was in February 2018, when the unknown exchange lost BitGrail nano-tokens worth $195 million to hackers. It is not surprising that many crypto investors avoid using smaller exchanges and wait for new crypto currencies to be listed on exchanges such as Binance.
What are the effects of a large stock exchange listing?
At the moment, the largest stock exchange listing that can receive a crypto currency is on Binance. To demonstrate the power of a Binance listing, let's take a look at QLINK, which was first listed on the stock exchange on 26 March 2018.
Binance announces QLC listing.
What happened to QLC's course on March 26? The first thing you will notice is that the price has gone up from $0.109 to $0.24 per token. That's right, QLC increased in price by 120% due to a Binance listing. You will notice that the price then fell quickly. Overall, the Binance listing was positive for QLC and you can see that the trading volume has increased significantly.
These peaks in a Binance listing occur again and again. Pretty much every time the price of the listed crypto currencies rises and then settles at a higher level than before the listing. Loom Network were also listed on Binance on May 2, 2018.
Binance announces the inclusion of LOOM
Guess what happened? On the day Binance was listed, the price of LOOM rose from $0.295 to $0.756 per token. That's a price increase of 156% in one day at the top. As with most new Binance listings, the sharp price increase was short-lived. However, LOOM was still trading at a higher level than before the Binance listing.
Take advantage of new crypto-currencies at large exchanges
The way we take advantage of the Binance listing is to purchase promising crypto-currency projects before they are listed with Binance. When a Binance listing is announced, we simply transfer the crypto-currency to Binance and sell it.
The trick is to find trusted crypto exchanges that list coins after they come out of the ICO. We use Kucoin for that. In fact, QLINK was first publicly traded on Kucoin. This is almost three months before Binance listed the project.
QLC announces the listing on the Kucoin stock exchange
It is certainly possible to profit very well from Binance listings. However, we recommend that you conduct your research on smaller exchanges before taking any steps. Conversely, if an exciting new crypto currency is listed on Binance, it is probably a good idea not to buy it immediately and wait for a cheaper entry point
Reason 2: Rumors of crypto currencies
You should know that the crypto markets are full of fake messages, hacks and hype. Crypto is perhaps the only industry in which it is common practice to make an announcement of an announcement.
It is very common in the crypto industry for projects to announce that there are "massive" messages and that the price of the crypto currency is rising. In April 2018 Verge may have created one of the larger message-driven "pumps". The announcement of the announcement was:
Verge (XVG) Announcement of an announcement.
For weeks, speculation ran over the Internet, and investors tried to guess with whom the partnership was formed.
Speculations about the Partnerships of Verge (XVG) are spreading on the Internet.
On April 5, Verge traded at only $0.05 per coin. Verge finally pushed back the announcement to April 17th and the price peaked at $0.11 per coin. In less than 2 weeks the price rose 120% due to partner speculation and hype.
On April 17, Verge officially announced that they have entered into a partnership with PornHub.
Verge (XVG) announces the partnership with Pornhub on Twitter.
What happened to the prize? Well, the prize fell off a cliff. From $0.11 before the announcement to $0.069 later on the day of the announcement. To put it another way, Verge lost 37.2% of its value in a single day because the announcement of the partnership did not meet expectations.
How can you take advantage of the crypto currency rumors? Well, the strategy we follow is to buy the rumor and sell the news. Again and again we see that the prices of crypto-currencies rise rapidly in anticipation of a "big news". When the news does appear, it usually does not meet expectations and the price then returns to a more appropriate level.
Substratum has hacked his Twitter account
The Substratum Twitter hack on May 2, 2018 shows why you should not always believe what you read and how far some people will go to manipulate a crypto currency price. The announcement on the official Substratum Twitter account announced that the SUB token will be added to Coinbase.
Fake Coinbase listing on the Substratum Twitter account
The news was not supported by any Coinbase source, which should have announced a red flag immediately. However, many investors believed the announcement and thought that the "news" was real and that the price of Substratum would rise. This one bogus announcement saw the Substrate price rise from $0.84 to $0.97 per token in minutes. In percentage terms, this price increase was 15.47%. The price dropped below the pre-announcement level very quickly after the message was detected as fake.
Fortunately, the Substratum team reacted very quickly and showed that they were hacked. This naturally led to a rapid drop in the price of the token.
Substratum notifies the Twitter community about hacks.
Reason 3: Social media
There are many great social media influencers who are really interested in crypto currencies. Basically it makes sense for a crypto YouTuber to talk about coins or ICOs in which they have personally invested and for which they are passionate. The other side of this is that influencers with large followers are likely to inadvertently raise the price of crypto currencies they are passionate about.
Of course, a part of the audience of a YouTuber is probably influenced by an influencer's enthusiasm for a crypto currency and would like to include it in his portfolio. Some YouTubers actually have about 200,000 followers, and their support of a crypto currency could potentially result in millions of dollars being invested in the project. The problem is that if a tip is given, many viewers will go out and buy the crypto currency in bulk at the same time. An increase in demand usually leads to an increase in price. This leads to many investors buying at inflated prices.
There are some social factors that we really respect. However, when a crypto currency is recommended by several influencers, we like to hold back until the hype dies down.
Be careful with social factors. Just because someone has a lot of subscribers doesn't mean that person can't be corrupt. In fact, several YouTubers led their audience into the Bitconnect scam and many people lost all their money.
Bitcoin-News.one's strategy is to invest in projects that we like and believe in, rather than blindly following the "tips" of other opinions. Use Influencer as a resource to take a closer look at interesting projects, but not to invest blindly in them.
Reason 4: Hardware wallet support
The most secure way to store crypto currencies is to use a hardware wallet and the two most popular brands are Trezor and Ledger. Many investors attach great importance to the security of their crypto portfolio. This means that if a new crypto currency is supported by a hardware wallet, you can expect a certain price increase.
Reason 5: Roadmap milestones, rebranding & conferences
On the website of each crypto currency you will usually find a roadmap with milestones for the project. An example of a major milestone is the introduction of the main network of a crypto project. What the upcoming roadmap milestones, the rebranding and the conference have in common is that anticipating these events usually leads to a price increase.
Reason 6: "Pump and Dumps"
Put simply, a pump and dump is a form of manipulation of the crypto market. Typically, this is a group of people who join together to manipulate the price of a crypto currency. The pump is started by the group buying in bulk, which leads to a price increase. The group hopes that investors will see the price rise and that the fear of missing out will lead to buying. The Pump and Dump group will then sell and make a profit.
We have written a special article about "Pump and Dumps", how they work and how to recognize them. We recommend you to learn more about it and how to avoid such manipulations
The truth is that the crypto-currency markets are currently driven by emotions and expectations rather than the underlying fundamentals. This is actually quite natural in a new market like the crypto-currency. If there were never a gap between price and technology, then any new technology would only slowly appreciate in value at the beginning. Over time, we expect things to change and crypto prices to be more influenced by the underlying fundamentals.
We believe that the six reasons mentioned above are the main drivers for the price increases of crypto currencies in the crypto market. External macro trends also have a major impact on crypto currency prices, but we will discuss this in detail in another article.