Our cryptocurrency forecast: That's why crypto prices will rise!
Have you ever felt like cryptocurrency prices go up and down for no apparent reason? The factors that affect the prices of cryptocurrencies are not only important, they can also be used for profit. We are going to examine the key factors driving crypto prices in the market and share the strategies we use to take advantage of them.
Reason 1: Exchange performance
Price increases in cryptocurrencies are mainly driven by the laws of supply and demand. Simply put, the more people who have access to a cryptocurrency, the higher the demand and the higher the price. Yes, emotions like hype play a role in the demand for a cryptocurrency. However, we have to accept that most people do not like creating new accounts on unfamiliar exchanges in order to gain access to a new cryptocurrency. What do most investors do? They wait until the new cryptocurrency is listed on an exchange where they already have an account and buy it later.
Since cryptocurrencies are only just getting out of their initial coin offering, most don't get a major listing right away. Instead, these cryptos are typically sold first on smaller exchanges and later on larger exchanges such as Binance listed. If we take Holochain as a study, it first came from 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 heard of? Chances are you haven't heard of any exchange.
In cryptocurrencies, it comes down to trust in the exchange. Many veterans in the cryptocurrency markets have lost a lot of money to unknown exchanges. An example of this was in February 2018 when the unknown exchange BitGrail lost $ 195 million worth of nano tokens to hackers. It is not surprising that many crypto investors are avoiding the use of smaller exchanges and waiting for new cryptocurrencies to be listed on exchanges like Binance.
What are the implications of a large listing?
Right now, the largest listing a cryptocurrency can get is on Binance. To demonstrate the power of a Binance listing, let's take a look at QLINK, which was first listed on March 26, 2018.
Binance announces QLC listing.
What happened to QLC's course on March 26th? The first thing you will notice is that the price has increased from $ 0,109 to $ 0,24 per token. That's right, QLC was up 120% in price due to a Binance listing. You will find that the price rise 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 cryptocurrencies 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 it was listed on Binance, the price of LOOM rose from $ 0,295 to $ 0,756 per token. That's a 156% price hike in one day at the top. As with most of the new Binance listings, the sharp rise in prices was short-lived. However, LOOM was still trading at a higher level than before the Binance listing.
Use the advantages of new cryptocurrencies on a large exchange
The way we take advantage of Binance listing is by purchasing promising cryptocurrency projects before they are listed on Binance. When a Binance listing is announced, we simply transfer the cryptocurrency to Binance and sell it.
The trick is to find trustworthy crypto exchanges that will list coins after they come out of the ICO. We use Kucoin for this. In fact, QLINK was publicly traded on Kucoin for the first time. That's almost 3 months before Binance listed the project.
QLC announces listing on the Kucoin exchange.
It is certainly possible to benefit very well from Binance listings. However, we recommend that you do your research on smaller exchanges before taking any action. Conversely, if a new exciting cryptocurrency is listed on Binance, it is probably a good idea not to buy it right away and wait for a cheaper entry point
Reason 2: rumors of cryptocurrencies
You should know that the crypto markets are full of fake news, hacks, and hype. Crypto is perhaps the only industry where it is customary to make an announcement of an announcement.
It is very common in the crypto industry for projects to announce that there is "massive" news and that the price of the cryptocurrency is going up. 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.
Internet speculation raged for weeks, and investors tried to guess who the partnership was with.
Speculation about Verge's (XVG) partnerships is spreading on the internet.
On April 5, Verge was trading at just $ 0,05 a coin. Verge eventually pushed back the announcement until 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 17th, Verge officially announced that they had partnered with PornHub.
Verge (XVG) gives up the partnership with Pornhub Twitter famous.
What happened to the award? Well the price has fallen 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 as the partnership announcement didn't live up to expectations.
How can you take advantage of cryptocurrency rumors? Well the strategy we are pursuing is to buy the rumor and sell the news. Again and again we see that the prices of cryptocurrencies are rising rapidly in anticipation of "big news". When the news comes up, it usually doesn't live up to expectations and then the price returns to a more reasonable level.
Substratum hacked his Twitter account
The Substratum Twitter Hack on May 2, 2018 shows why you shouldn't always believe what you read and how far some people will go to manipulate a cryptocurrency price. The announcement on the official Substratum Twitter account announced that the SUB token was too Coinbase should be added.
Fake Coinbase listing on the Substratum Twitter account
The news was not supported by any Coinbase source that should have immediately announced a red flag. However, many investors believed the announcement, thinking that the "news" was real and that the substratum price would rise. That one fake announcement saw the Substratum price rise from $ 0,84 to $ 0,97 per token in minutes. In percentage terms, this price increase was 15,47%. The price fell below the pre-notice level very quickly after the message was identified as fake.
Fortunately, the Substratum team was very quick to respond and revealed that they had been hacked. This, of course, resulted in a rapid drop in the token price.
Substratum notifies the Twitter community of hacks.
Reason 3: social media
There are a lot of big social media influencers who really care about cryptocurrencies. Basically, it makes sense for a crypto YouTuber to use coins or ICOs speaking that they have personally invested in and are passionate about. The flip side of this is that influencers with large followers are likely to inadvertently drive up the price of cryptocurrencies they are passionate about.
Of course, part of a YouTuber's audience is likely to be influenced by an influencer's enthusiasm for a cryptocurrency and want to add it to their portfolio. Some YouTubers actually have around 200.000 followers and their support for a cryptocurrency could potentially result in millions of dollars being invested in the project. The problem is that if a tip is given, a lot of viewers will go out and buy the cryptocurrency en masse at the same time. An increase in demand usually leads to an increase in prices. This leads to many investors buying at inflated prices.
There are some social influencing factors that we really respect. However, if a cryptocurrency is recommended by several influencers, then we like to hold back until the hype has subsided.
Be careful with social influencers. Just because someone has a lot of subscribers doesn't mean that person can't be corrupt. In fact, several YouTubers led their audiences into the Bitconnect scam and a lot of people lost all of their money.
The strategy of Bitcoin news.one consists of investing in projects we like and believe in, rather than blindly following the "tips" of other opinions. Use influencers as a resource to take a closer look at interesting projects, but not to blindly invest in them.
Reason 4: Hardware wallet support
The safest way to store cryptocurrencies is by using 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 cryptocurrency is supported by a hardware wallet, you can expect a certain price increase.
Reason 5: Roadmap Milestones, Rebranding & Conferences
You can usually find a roadmap with the milestones for the project on the website of each cryptocurrency. An example of a major milestone is the introduction of the main network of a crypto project. What the upcoming roadmap milestones, rebranding, and conference have in common is that anticipating these events will usually result in a price spike.
Reason 6: "Pump and Dumps"
Put simply, a pump and dump is a form of manipulation of the crypto market. Usually these are a group of people who band together to manipulate the price of a cryptocurrency. The pump is started by the group buying en masse, which leads to a price increase. The group hopes investors will see the price rise and fear of missing out will lead to buying. The “Pump and Dump” group will then sell and make a profit.
We wrote a special article on "Pump and Dumps", how they work and how to recognize them. We encourage you to learn more about it and learn how to avoid such manipulation
The truth is, emotions and expectations are driving the cryptocurrency markets right now, rather than the underlying fundamentals. This is actually quite natural in a new market like cryptocurrency. If there was never a gap between price and technology, any new technology would only slowly increase in value in the beginning. Over time, we expect that things will change and that crypto prices will be more affected by the underlying fundamentals.
We believe that the six reasons mentioned above are the main drivers behind the price increases in cryptocurrencies in the crypto market. External macro trends also have a huge impact on cryptocurrency prices, but we'll cover this in depth in another article.