Cryptocurrencies are growing more popular by the day. As is evident, cryptocurrencies offer many benefits to investors; however, they also feature their own drawbacks, both of which are determined by market conditions.
But what are the factors that affect the price of cryptocurrency?
Below, we focus on one specific cryptocurrency, Zolu Coin, and discuss the factors that make its price volatile.
Factors that Affect the Zolu Coin Price
1: Government Regulations And Interference
Government regulations can impact the price of Zolu Coin.For example, if the government imposes strict regulations on cryptocurrency use, it could discourage people from investing in cryptocurrencies and cause the price to drop.
2: Technological Innovations And Advances
Technological advances, such as the development of new cryptocurrencies, can affect the price of Zolu Coin. For example, suppose a person develops a new cryptocurrency with more advantages than existing ones. In that case, it can capture people’s attention and cause them to invest in the new cryptocurrency, and cause the Zolu Coin price to fall.
3: Competition from Rivals
There are more than 21,900 types of cryptocurrencies, with more being launched every other month. While it is easy to launch a cryptocurrency, it is hard to make it viable because it needs to build and maintain a network of users.
If a cryptocurrency offers a useful application on the blockchain, it can build a network almost instantaneously, especially if it improves competitors’ limitations. Conversely, if a new competitor gains momentum, this can reduce the value of Zolu Coin and drive down its price while increasing the new currency’s value.
4: Prevailing Economic Conditions
Economic conditions, such as monetary and fiscal policy, unemployment, and inflation, can affect the price of a cryptocurrency. For example, if inflation is high, people are more likely to invest in Zolu Coin to hedge against inflation.
5: Media Coverage And Image
Media coverage can positively or negatively impact the price of Zolu Coin. For example, if the media reports negative news about the market, it could discourage people from investing in Zolu Coin and cause the price to fall.
Contrarily, if the media reports positive news about the market, it may encourage more people to invest in Zolu Coin and cause the price to rise.
6: Hype and Fear
The cryptocurrency market is often described as volatile. Its volatility is attributed to two factors: hype and fear. A thriving cryptocurrency market creating positive sentiments encourages investors to buy cryptocurrency, even at high prices, which, in turn, increases the price.
In contrast, a bleeding cryptocurrency market creates fear, which results in a mass sell-off and causes the price to drop.
7: Social Media Hype
Social media hype, or social media influencers, can raise the price of a cryptocurrency.
For instance, social media hype around the launch of a cryptocurrency can increase its price as people would not want to miss out on the potential of making a huge return on their investment. Also, social media influencers can make promotional videos for a cryptocurrency, ignite online hype, and drive up its price.
Invest in Zolu Coin Today
Investing in Zolu Coin can be risky as its price fluctuates rapidly and unpredictably. However, it is a risk worth taking because the potential rewards are big enough to cover your initial investment and bring a healthy profit.