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Why do virtual currencies rise and fall (How do virtual currencies rise)?

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Why do virtual currencies rise and fall? The reasons will be explained through

Why do virtual currencies rise and fall (How do virtual currencies rise)?

Why do virtual currencies rise and fall? The reasons will be explained through some data.

After experiencing a bear market in 2018, the price of Bitcoin (BTC) has been oscillating at a high level. Ethereum (ETH) has surpassed its previous high point at the end of 2017 and reached its lowest point in early 2015. However, the current situation seems to be different. Ethereum Classic (ETC), Litecoin (LTC), EOS (EOS), and XRP (XRPLedger), which were the worst-performing digital assets in the past year, have all experienced significant increases in their value. However, despite this, the price of Bitcoin has not yet returned to its initial level during the bull market. Since the second half of 2018, the total trading volume in the cryptocurrency market has been continuously decreasing. Also, the price of Bitcoin has remained relatively low in recent times. As of now, Bitcoin’s market value has only increased by about 40%. Additionally, according to CoinMarketCap data, the global average price of Bitcoin has now reached its historical high in May. (Note: “Bitcoin” refers to blockchain tokens that are mined by hash functions in a block with a consistent number of tokens within that time period. If Bitcoin is calculated according to this formula, the current Bitcoin network’s computing power is equivalent to about 20% of the entire network’s mining difficulty. The larger this proportion, the more electricity each person on the network needs to consume to obtain new block rewards. Therefore, whenever Bitcoin’s network activity becomes more concentrated, the “block rewards” should rise to a certain extent, resulting in a decrease in mining costs.)

On the other hand, due to the large fluctuations in Bitcoin’s price in recent months and the impact of various factors, many people believe that virtual assets can be used as a safe-haven tool to hedge against inflation, avoid tax risks, and other issues. However, this situation is not stagnant. For example, with more institutional investments entering the market, Bitcoin may continue to be recognized as a new asset class and gradually replace other mainstream currencies. Also, all digital financial derivatives, including Bitcoin, will continue to exist until it is no longer fungible or at least something closer to gold.

How do virtual currencies rise

How do virtual currencies rise? In the past year, as the price of Bitcoin continues to rise, various tokens have experienced sharp declines. According to data from CoinMarketCap, as of now, the market value of virtual currencies has exceeded 40 billion US dollars (as of March 31), with a 24-hour trading volume of 5.16 billion US dollars (data from CoinMarketCap).

However, due to the lack of clear regulatory policies and standards in the virtual currency market to protect investors, some virtual digital assets are widely considered to be risky. According to relevant sources, these risks may include high investment thresholds, insufficient liquidity, and inability to exchange for fiat currencies.

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