Why Are Crypto Price Prediction So Hard?

The market of cryptocurrencies is getting more popular in recent years, and a lot of people are interested to start trading with digital assets. The leader in this market is Bitcoin, with a current price of around $46,000. On the other hand, the great feature of this market is high flexibility since there are over 2,000 tokens and coins available for trading today.

The great news is that companies are implementing this model of payment processing as well, which is one of the most important factors related to improved stability. One of the most recent models that people will find interesting is the passive income by providing services and get paid in tokens. You can read more about this at topiacoin.io.

However, the main challenge is related to high volatility. The most important thing for traders is to determine the right moment for investing, and then selling the assets to make a profit. Therefore, a lot of people are relying on predictions, but the problem is that there are so many predictions available today, but most of them are not accurate.

While it is always recommended to follow only financial experts with skills and experience related to this market, the problem is that even they are not capable of making accurate predictions. The main reason for that is that many factors can affect the prices. We are going to analyze more on this topic in this article.

Main Factors that Are Affecting This Market

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It is essential to understand that there are both internal and external factors that can influence the positive or negative movements of prices. In that matter, you should never rush with your decisions and investments. The problem is that there are still a lot of people who don’t know much about it, but they rely on previous situations where investors managed to make large profits by simply buying various types of crypto, and waiting for a higher value.

The best example of that is Bitcoin. However, you need to understand that it was possible only in the first couple of years after the introduction of BTC and many other types of cryptocurrencies. When you check the detailed analyses, you will notice that there are frequent changes, especially when it comes to the most popular options.

For example, the price of ETH was over $4,000 in May, and then it dropped to under $2,000 in July, while the current price is around $3,100. You can find a lot of predictions from previous years, and you will notice that most of them said how the price of ETH will only go up. In reality, the situation is much different.

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The most important factors that can affect the price are related to the technical properties of some coin or token, popularity on the market, volume in trading, additional expenses, legal disputes, official regulations, and influence from external factors like predictions and large investors. When it comes to large investors, the best example is Elon Musk who managed to have a huge influence on this market. His activities resulted in a big increase in the value of BTC, and then in an even bigger drop in price.

The reason was that he had bought over $1.5 billion worth of BTC, and announced that Tesla will start accepting it. However, he then decided to stop that and started to talk about the influence of mining on the environment. These activities brought the value of BTC to over $60,000 and then dropped it to around $30,000 in a short period.

Moreover, his latest activities where he is again interested in this market influenced another rise of values. Bitcoin is the leader in this market, and its trends area affecting most other cryptocurrencies as well. People who are using detailed analyses to create predictions cannot include the activities of large investors as one of the factors.

Fake Predictions and Poor Analyses

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Another problem is that you can find a lot of predictions that are introduced either by online crypto exchanges or investors who are trying to attract people to start trading. This is the main reason why most of them are not reliable. When you are reading some predictions, be sure that the creator is using the most important factors.

On some level, that might help you to make the right choice. Still, some factors are completely unpredictable, like the actions of large investors and official regulations. For instance, if some big economy suddenly decides to ban cryptocurrencies or increase the taxes on the profit, that will surely affect the values.

What is the Best Solution?

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As you can see, relying only on predictions is never a good option. Even if you find analyses from experienced people in this field, keep in mind that there are many unpredictable occasions possible. Therefore, the best strategies are proper money management and flexibility. You should know that there is always a chance to lose money, but you can lower that chance if you invest in different options that have decent potential to grow over time.

We suggest you try trading with the most popular options and combine them with affordable cryptocurrencies that are relatively new on the market and have features that provide them with the potential to become more valuable.

The Verdict

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It is crucial to stay in touch with all of the news related to this market. That can help you to make the right choice and determine the moment when you should buy or sell your digital assets. When it comes to predictions, you should focus only on those shared by experts. However, use them only to get more information about the potential influence of different factors.

Keep in mind that most of these analyses are shared by investors or companies who are trading on this market, who are sharing this news with intensions to affect the market at some level. One of the best ways to make the right choice is to combine the information you get from various sources.