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Explained- How Cryptocurrency maintain their prices?

Dec 22, 2017

Explained- How Cryptocurrency maintain their prices?
1.
What we mean by maintaining a price?

Maintaining a price means helping the currency to maintain a stable position in the market or facilitating it to rise. Cryptocurrencies at the time of trading encounter a range of several forces that propel their prices or impel it. To maintain a particular stance in the market, there are a wide variety of measures, which are currently being used.

We need to understand here that the price of a cryptocurrency is a direct manifestation of its worth. Again the suitability and usefulness of the currency convey that the demand is high in the market. A simple economics profess that the price is directly affected by the demand and supply of any currency.

Again there are numerous other factors in revision, which can impinge on the price both externally and internally. For instance, some traders buy cryptocurrencies only to sell them afterward and deliberately indulge in speculations, forecasting and exercise tentative strains.  These are the kinds of external factors, which may perhaps distress the value of a coin despite its genuine usefulness.

Many times these strain and pressures have a negative impact as the traders start selling, the price goes downhill. Nonetheless, the developers and engineers possibly can en route to a stash of their plans to plunge the price uphill and contradict the downhill mechanism.

2.
How media helps in maintaining a price?

Good media relations are helpful for any company, and positive press coverage can do wonders for you. If the company is regularly featuring in the news, your Management personals are approached by the media for interviews or the partnership announcements by the company is being covered, this will make any you build a successful reputation amongst your target audience, and will have a positive effect on finances of the company.

The prices of the cryptocurrency may elevate if the developers can constitute innovative features, facilitating it to become more tradable on a new exchange, and thus a software analyst on a media platform may advertise the critical highlights for your cryptocurrency. Good media coverage states that the project is still growing and advancing towards a better usage. These things are always excellent for the price rise, and this is where the media effect comes in.

By collaborating with news media, the cryptocurrency strategists ensure that they maintain a continual flow of breaking news about their particular cryptocurrency. The developers have been long using these strategies, which can considerably enhance the already ascendant forces of the cryptocurrency price.

3.
How Can Public help in sustaining the price?

Cryptocurrencies can hugely benefit from their believers. In fact, according to many analysts, these believers are the one, which has helped the digital coins like Bitcoin, Ethereum gain a huge market cap. To state it in one line- having sizeable and trustworthy followers who believe in your mission depicts a genuine prosperity for your cryptocurrency.

However, it is significant to understand here that people build faith on only those, which already are trusted by many. As such, most of the cryptocurrencies take their time to develop a core audience of serious fans. These people then serve as opinion leaders too who contribute innovative ideas for the advancements in the coin, and hence provide valuable feedback and, more significantly, convince the new participants to trust their favorite cryptocurrency.

Collecting a strong support from the fans is also fundamental before beginning an ICO campaign. You can compare it with a range of snowball effect. Hence, if a high number of people is investing in a coin, it is more likely that the outsiders will be convinced and they may also start contributing. Again the concept of increased demand is applied which pushes the price up. You can now comprehend why followers start gathering up before the launch of an ICO.

4.
How can the price be affected artificially?

Cryptocurrencies need adequate liquidity to grow. We have to find out if there is sufficient organic activity in the market or not; it can be structured artificially by utilizing trading bots. The popularity of the cryptocurrency depends on a lot of the volume of its purchase. And if there are not enough quantities of investment it can pose a genuine problem in the initial years of cryptocurrency as not many people can trade it on a regular basis.

In many such scenarios, bots can be utilized which automatically increase the buying and selling activity in the market, according to the instructions defined by the administrators. By continually transferring the digital currencies, these artificial bulls and bears increase liquidity, in the market, which also allows the capitalization to rise steadily.

Apparently, this fake mechanism cannot generate demand for the currency on its own, and the real demand depends upon the intense marketing and promotion. Nonetheless, in many cases, these artificial bots can be an inventive method for the growth of the cryptocurrency and provides an additional boost of liquidity.

5.
How the Guerilla strategy affects the price?

Anyone right now can relate that social media are an inexpensive and highly impactful method of reaching out to your target audience and also creating a potential audience base.  The social media platforms provide the much-required platform for building a trusted fan and hype in the market.

There are various groups committed in the space of cryptocurrencies that are continually marketing on the social media platforms and characterize a very tightly knit community base. These communities interact with the regular users and use social media platforms for and giving spreading updates and news about the new developments in the life of their favorite coin.

The most successful strategy, which is employed for the social media marketing of cryptocurrency, is spreading rumors about a currency’s future price movement or forecasting the new software developments. Social media is a channel, which can potentially diffuse anything like wildfire. Sometimes, developers deliberately leak their secrets to gain popularity.