One thing is well known in the cryptocurrency market and that is its volatility. The existence or non-existence of the proportion of price rise and fall are impossible to confirm. Both types of cryptocurrencies are affected – both high-valued Bitcoin and low-priced – Dogecoin. Many investors use trends to profit. However, they are not completely random. This market, similar to any other market, exhibits various cycles these are influenced by a combination of factors.
In this article we will detail how financial news influences the cryptocurrency market. It’s important that you too stay up to date with this news so that you can make timely decisions about your virtual wallet.
The influence of news on bitcoin price and cryptocurrency market trend
There are two main trends in a complete market cycle: the uptrend and the downtrend. The ascending one, also called the Bull market, is characterized by gradually rising prices, at which point interest in the market also increases. Investors start to sell, motivated by the rising price, but also by the fear of missing out on the wave that could bring them a profit. After the bull market period, when activity is high, comes the downtrend – the bear market. Prices start to fall as a result of market saturation, which is also influenced by investor skepticism about the current state of the market. The cycle starts again when the process and costs reach a limit.
The impact of positive news on cryptocurrency prices
Positive news can generate rapid increases in the price of bitcoin or other cryptocurrencies. The crypto market is generally sensitive to new news as investor reactions cause the cryptocurrency price to fluctuate. The phenomenon is present no matter what cycle the market is in. Moreover, the rise of Bitcoin also brings with it the rise of other cryptocurrencies.
Favorable regulations
When a large company or a country announces the adoption of cryptocurrencies, both demand and confidence in the cryptocurrency increases. Consequently, and cryptocurrency price increases, and the market is on the rise. For example, when El Salvador became the first country to accept bitcoin as an official currency, bitcoin’s value rose. Similarly, Bitcoin price had a significant spike when Elon Musk announced that Tesla would start accepting Bitcoin as an official payment method.
Institutional investment
When massive capital is introduced into the market by a large investor that people trust, such as corporations, Bitcoin’s price automatically rises. This is because Bitcoin becomes the object of investment. A clear example that illustrates this are the Americans at MicroStrategy who own 244,800 bitcoins, and recently bought bitcoins worth 1.1 billion dollars. To reach this achievement, the company sold out of its regular stocks to buy bitcoin (information taken from this source).
The impact of negative news on the Bitcoin price
Negative news leads to capital withdrawing from the crypto market, which creates more supply than demand. Falling prices also create a general panic, and the market can only go down. Whether it’s a slow or rapid cryptocurrency price drop, market reaction is inevitable following negative news.
Government bans and unfavorable statements
In 2021, the Chinese government announces a ban on cryptocurrency mining and trading. Being that much of the cryptocurrency’s computing power is located in China, the news caused a huge drop in the price of bitcoin. The panic created reduced somewhere around 30% of bitcoin’s value within a matter of days.
A not so big, but still considerable impact was Elon Musk’s statement on Twitter about Bitcoin payments. Also in the year 2021, he announced that Tesla would no longer accept Bitcoin payments, even though during the same year he had stated the opposite. Elon Musk’s post led to an immediate drop in Bitcoin price of 10%.
Technical issues
In 2022 the cryptocurrency Solana (SOL) suffered a drop in price of 96% compared to its heyday in November of 2021. The cryptocurrency’s fall was caused by various factors:
- The fall of a trading platform called FTX, associated with the SOL cryptocurrency
- Slope Wallet, considered to be the main wallet of SOL was hacked, causing a loss of about 4.5 million USD
- lost most of the developers working on the project, leading to stagnation and uncertainty for investors who were closely following the cryptocurrency
Currently, the price of the cryptocurrency has recovered to 137.99 USD, but this is the perfect example of how negative news and events lead to the downfall of a project.
How do you stay up-to-date with news about the cryptocurrency market and Bitcoin Romania?
- Financial and crypto market news sites: follow sources that deliver the news quickly and accurately. You can also subscribe to newsletters for extra information. It’s essential to follow the news constantly. Make it a habit so you can make the right decisions without too much pressure.
- Social networks and forums: there are lots of groups on Reddit and X accounts where you can get your information and read opinions. You can find a group or thread that suits whatever cryptocurrency piques your interest.
- Cryptocurrency platforms: Platforms like Abarai cover different topics in the crypto world in the form of blog posts. Visit our blog to learn about other curiosities.
In conclusion, news plays a very important role in the stability and possible fluctuations of the market and cryptocurrency price. As mentioned in the article, certain news can bring down a cryptocurrency or help it to rise in a very short time. In most cases, the events that influence bitcoin price cannot be anticipated, and the general reaction of crypto investors, be they small or large, dictates how prices will fluctuate. If you want freedom of decision and almost instantaneous transaction speed, use Abarai. Our platform is dedicated to people who want to trade cryptocurrencies in a short time, without having to do any checks.