What are the factors dictating altcoin prices?
How can we determine the direction altcoin prices are heading? Cryptocurrencies are volatile beasts. Traditional forecasting and price prediction models such as moving averages, underestimate the potential of these volatile currencies rendering such existing prediction methods invalid.
So how does an investor predict the price movement for altcoins? There are several factors that influence the price action of altcoins, but ultimately there is high uncertainty in the outlook for the cryptocurrency asset class as a whole. However, we’ve compiled here for you some of the key factors influencing the price movement of altcoins, that should help you invest successfully:
The influence of Bitcoin
Bitcoin’s leadership in the cryptocurrency space means that price changes for Bitcoin can heavily impact sentiment across the whole crypto asset class. Statistics from Coinmarketcap for the past month have seen significant volatility, with prices reaching $6,000 and recovering to $10,000 in February alone.Altcoins have followed the bitcoin trend.
Regulation of cryptocurrency
Acceptance of cryptocurrency and the regulation of these currencies in relation to anti-money laundering laws play a large role in the price action of the cryptocurrency asset class. For example, China’s recent regulatory action on banning initial coin offerings (ICOs), and the movement to stop trading in cryptocurrencies, have negatively influenced the price of Bitcoin and altcoins in the past year. On the other hand, each milestone toward the positive regulation of cryptocurrencies cements their legitimacy and paves the way for a bounce in altcoin prices.
While these first two factors retain a level of uncertainty, we can take solace in the Warren-Buffet style of investment: check the fundamentals. If you believe in the fundamentals of the product or industry you are investing in, you are in a better position to see returns. Altcoins are the tip of a fundamental technological innovation – the blockchain. Altcoins will do well if the idea behind it solves a need and provides an innovative application of blockchain technology, and the technology behind the currency is proven. Uncertainty further dissipates based on the Altcoin’s team – a transparent team behind the technology can provide confidence to investors looking for Altcoins to invest in.
Altcoins have an uncertain future – ultimately, the prices fall into the hands of the market. As we’ve seen, companies with strong fundamentals – an innovative idea, proven technology, and a transparent team, tend to do well in the long term. This is no different for altcoins – fundamentals will eventually separate certain altcoins from the rest.
Written by: Khei Wong & the maxdata.io team
Disclaimer – Informational purpose only! Make investment decisions at your own risk and consideration! All investments, including digital coins and tokens, is speculative in nature and involves substantial risk of loss. We encourage our readers to invest carefully. We also encourage readers to get personal advice from your professional investment advisor and to make independent investigations before acting on information that we publish. Much of our information is derived directly from information published by companies or submitted to governmental agencies on which we believe are reliable, but are without our independent verification. Therefore, we cannot assure you that the information is accurate or complete. We do not in any way warrant or guarantee the success of any action you take in reliance on our statements or recommendations.