Crypto Volatility Decoded: What Drives Bitcoin and Ether Prices?
For a long time, I was curious about what drives cryptocurrency prices, especially since they don’t represent a physical company, product, or asset like conventional stocks do. Stocks have fundamentals—like a company’s earnings, market presence, and future growth potential—that investors analyze. However, cryptocurrencies, like Bitcoin and Ether, don’t have these tangible underpinnings, which makes their price movements seem more mysterious. Here’s what I’ve found, exploring both the unique factors behind crypto price volatility and the differences from traditional stock shares. Key Factors Driving Price Fluctuations in Bitcoin and Ether 1. Market Demand and Supply Dynamics For Cryptocurrencies : Bitcoin has a limited supply of 21 million coins, which creates scarcity and often drives demand as investors view it as a scarce asset. Ether doesn’t have a cap but instead relies on its supply being controlled through mining and staking rewards. This scarcity and demand play an outsized role...