Digital currencies reached the financial market, wreaking havoc since no one was betting on them, and it was their users who gave the necessary support to the point of listing them as an ETF on the Stock Exchange. Check out these best bitcoin trading tips so you don’t get bored with the low price of it.
The opinions regarding their functionality and profitability are diverse, from those who support that 100% to those who are not in favor of investing in cryptocurrencies.
A new way of seeing the finance sector, but definitely with the charm of digital and the breadth that this market offers, even without leaving home, just one click from your computer or mobile device.
How is the price of Bitcoin established?
As is known, traditional currencies or Fiat money establish their value based on the calculations and estimates set by the central banks of each country.
An important aspect is the control that governments have through regulations and laws on the determination of a legal tender currency, which directly influences the valuation of the circulating assets of individuals and corporations.
Once these aspects are apparent, it is the moment in which the value of a currency is definitively established. After this process, financial institutions such as central banks supervise and control banknotes’ issuance according to the demand for money, either physically or electronically.
There, Bitcoin and the various digital currencies differ entirely; consequently, the way to establish the price of these digital assets is by the free supply and demand generated in the digital market.
In short, the higher the demand, the price of Bitcoin increases, and the higher the supply, the price decreases.
Although the nature of Cryptocurrencies is decentralized, their value is affected by aspects that are also inherent to the traditional financial market, such as events that arise and have an effect worldwide, changes in share prices, in general terms, the evolution of the world economy.
What leads to crypto winter?
To know what the consequences of a crypto winter are, we must mainly know what this curious term refers to.
When talking about crypto winter, a bearish period is established that lasts for a long time, making digital currencies more volatile, where their constant decline can cause collapse for their users.
One of the leading causes that promote the crypto winter is a relatively vulnerable external economic situation and whose measures to control it or factors outside the cryptographic ecosystem influence the valuation of digital assets.
In the case of the one we are experiencing in 2022, some of the effects of the crypto winter have been millionaire losses among the thousands of users of Bitcoin and other cryptocurrencies.
On the other hand, the companies known as exchange platforms are gradually closing the doors for future crypto operations.
To the point that many of these have had to make layoffs of up to 20% of their payroll as a preventive measure against a possible bankruptcy if the trend continues.
Cryptocurrency users’ position with the fall of Bitcoin
In short, users are the only ones affected by the critical situation digital assets are going through. Still, the drama generated around them is enough to continue promoting the most negative theories.
Such is the case of Bitcoiners, who take a completely different position from many experts and entrepreneurs who have invested in Bitcoin.
Expert investors in the digital market know how the volatility of cryptocurrencies fluctuates, which is why they know that after a crypto winter, a reasonably significant rise is continuously generated, and therefore, global returns.
It is essential to know that these digital financial instruments fluctuate freely. Still, once the supply and demand cycles are known, the present and future trends at the cryptographic level are more clearly understood.
Many Bitcoin users assume they have lost some money. Still, after understanding the logic of this digital currency, their operation and the transactions executed are evaluated with more excellent care and cunning.
conclusion
The most comfortable way to operate through digital currencies is by evaluating the past cycles of Bitcoin; for example, it is there where the critical data and the logic of the investments are reflected.
Panic is the worst ally of crypto investors; it is where many of those who bought Bitcoin at 50,000 today sell them desperately, faced with volatility and risk that they do not know how to handle.