Supply and demand is the most important determinant of cryptocurrency prices. This is the basic economic principle. If a cryptocurrency has a high token supply with little demand from traders and users, then the cryptocurrency’s value will drop. Conversely, if the supply of a particular cryptocurrency is limited and the demand is high, then the value of the coin will increase.
This is linked to the scarcity element that drives up prices and is one of the factors that saw the price of Bitcoin climb to its highest levels. The supply of Bitcoin is capped at 21 million BTC - which is relatively low compared to other token - white the demand has soared in the recent years.
The media or public sentiment also has a big influence over the price of cryptocurrencies. If a token or platform gets negative publicity, you would generally see the price of that token take a dip. While, if the same coin were to get high profile support and good media coverage, the price would almost certainly increase. This means prices are heavily influenced by human emotions and hype.
How is the price of Cryptocurrency determined?
