Why is the Blockchain industry fluctuating so much? Analyst David Smith conducted research and found out these factors that influence Cryptocurrency Price Changes. Do you believe there are other factors affecting Bitcoin?
20 December, AtoZForex – Contrary to popular perception, Blockchain investments have been rising since 2012. In that year, the total sum of investments was just $1.3M that came from 5 deals. In 2014, this value rose to $500M while in 2015, the corresponding sum was $524M. The year 2016 saw blockchain tech investments rising to $560M and this year, this number is slated to cross $1Billion.
Factors that influence Cryptocurrency Price Changes
1. Government intervention impacts cryptocurrency
It has been shown that the price of cryptocurrencies depends a great deal on government policy, intentions and statements. For example, during the Cyprus banking crisis, the price of Bitcoin came under heavy pressure. A recent chatter about government appointed regulators has also affected the price of Bitcoin and other currencies.
2. The Role of Media in cryptocurrency
Information regarding Blockchain is disseminated largely by media, particularly the numerous websites on technology. This is natural because this technology is largely about the application of web. However, there is a dark side to it’s also. Any negative news story about the blockchain technology immediately affects the prices of the various cryptocurrencies.
3. Stability of the cryptocurrency network
People will buy these digital currencies only when there is a continuous transaction of these ‘assets’. Unlike a Euro or a US dollar which has an inherent value that is stable, a cryptocurrency fetches value only when it is traded. So there should be regular and frequent transactions of these digital currencies in order that they remain valuable.
Future trends impacting Blockchains
1. Easy and risk-free settlements – According to the financial services research firm, Aite, banks are set to quintuple their spending in blockchains to $400M by 2019. In 2014, this figure was approximately $25M. While financial institutions are not interested in cryptocurrencies, per se, they are spending on this technology to minimize settlement risk. The quick and transparent nature of this technology helps banks to settle cash and security transactions. These settlements carry a lot of risk in the traditional mode of trading securities among brokers.
2. More education and collaboration – Blockchains are still new in the realm of financial technology. This means that in the coming years, more education and collaboration is required to evangelize this technology among the masses. This is required for the survival and growth of this technology despite a few major bumps that hit blockchains.
3. More regulation on the anvil – In 2017, we saw Japan and South Korea bring in regulations to govern transactions of Bitcoin and other currencies. The United Kingdom has also set up Financial Conduct Authority to oversee cryptocurrency transactions. The pace of regulation will increase in 2018 and beyond as more and more national governments will step up their vigil on blockchains. While this technology has the power to disrupt traditional companies like Uber and AirBnB in-depth case studies highlighting the Power of Blockchain is required to convince investors to enter this ecosystem.
This article was written by David Smith. David has experience in advertising and online marketing and managed major digital marketing projects in the E-commerce industry. His goal is to make people understand the cryptocurrency market in a better way, through his contributions and analyses of this volatile market.