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“Volatility of the cryptocurrency market 101: Understanding the fluctuation of prices and fees in the high risk world”
As the CRIPTO currency continues to get attraction as the main opportunity to invest, investors face a new set of challenges: prices instability. The cryptocurrency market is known for extreme fluctuations, which can result in significant losses if not managed properly. In this article, we will enter the world of cryptocurrencies and explore two key factors that contribute to the instability of the price: transactions and market available.
What are the transactions fees?
Transaction fees are expenses related to sending or receiving cryptocurrencies on the blockchain network. They can range from 1% to 10%, depending on the platform, payment method and network congestion. Transactions fees usually subtract the sender’s wallet and are credited with a cash wallet. This procedure is called “payment for transaction” (PFT).
For example, if you send 1 Bitcoin friend, a transaction fee would be about $ 20 to $ 50. Although this may seem a small price to be paid, it is quickly collected when considering the total cost of investment in the Crypto currency.
Why are transactions fees so high?
Transactions for transactions can be attributed to several factors:
* Network congestion : As more and more people begin to use crypto currency and perform transactions, the network becomes congested, leading to increased processing time and larger fees.
* Great Demand : Increasing the popularity of the CRIPTO currency has created a lot of demand for pay services, increasing transaction costs.
* Blockchain
: Blockchain technology is not yet optimized to process low tickets and fast transactions. This means that transactions can last longer than usual, resulting in increased fees.
Impact on Crypto Price
When transactions for transactions are high, it can lead to price instability. Here’s how:
* Increased market risk : higher transactions compensation means that investors are more likely to sell their cryptocurrency currency at the lower end of a particular range, which has led to reduced prices.
* Decreased liquidity : High transactions can make it difficult to buy and sell cryptocurrencies quickly, resulting in reduced quantities of trading and increased prices fluctuations.
Market Sentiment: The key factor in the instability of the price
The market mood plays a significant role in determining the prices of cryptocurrencies. Emotions and expectations of investors can increase market prices, leading to extreme volatility. Here are some key factors that affect the mood of the market:
* Investor confidence
: When investors feel optimistic about the future of cryptocurrencies, they may probably probably buy, increasing prices.
* Fear and uncertainty : contrary to this, when investors are scared or insecure due to market potential, they can be sold, leading to reduced prices.
Mitigation of cryptocurrency instability
Although transactions and market mood fees may contribute to price instability, there are steps that investors can take to relieve these risks:
* Diversify your portfolio : Spread your investments in different crypto currencies to reduce exposure to any particular property.
* Use stopping orders : Set up stopping orders to automatically sell assets when they fall below a particular price, limiting losses.
* Stay informed : Continuously educate yourself on market trends and development to make informed investment decisions.
Conclusion
Volatility of cryptocurrency is the reality that investors must fight with. By understanding the factors that contribute to the fluctuations of the price and take the risk relief steps, investors can move better in the Crypto Currency World. Remember, investing in a cryptic currency is a high risky, high prizes. It is important to be informed, disciplined and prepared for unexpected.