It is no secret that the cryptocurrency market is an up-and-down one, and when choosing certain assets, you always risk. Despite this, the area attracts more and more users.
Sometimes coins fall heavily in value due to any circumstances, and it seems that the project has died. But suddenly something happens, and the coin is reborn from the ashes. It is worth remembering the history of Bitcoin, which was buried more than once (and the entire crypto market with it), but those who believed and were reasonable have won.
In this article, we will consider the factors affecting the rise and fall of cryptocurrency prices, who sets those trends, and several significant cases.
What Affects Rate Change
The value of coins is not tied to gold or goods, as is the case with fiat money. The main factor is the supply-demand ratio on the largest exchanges. Sellers want to get more, buyers want to pay less. The trade-off between the two determines the current value of the coins. Small sites are guided by these quotes, but the information takes some time to get there. Therefore, in remote locations, the price of crypto is always outdated.
Many more factors influence the process of saturation/depletion of the market.
Consider the main ones:
- Tactics of bulls, bears, whales, and hamsters. Those are the names of the holders of crypto. By emptying a crypto exchange fund or transferring large amounts to it, you can artificially knock down or increase the excitement among customers.
- Natural disasters, social upheaval. To avoid the consequences of a jump in inflation or the physical destruction of money, people transfer fiat into crypto. After the position stabilizes, the exchange turns in the opposite direction. Accordingly, there is a rise, then a drop in tokens’ prices.
- Decisions of the governments of those states in whose territories mining and trade is intensively carried out.
- News, rumors, statements of media personalities.
Here are a couple of examples:
- In early 2021, the well-known Tesla company decided to sell cars for Bitcoin. Rumors stirred up the exchanges, the "king of the crypto" quickly went up (the maximum price of $65 thousand), and pulled most of the altcoins with it. However, it cannot be said that this news was the only reason for such a frisson.
- In June of the same year, the Chinese government decided to ban mining, which collapsed Bitcoin to $30 thousand. Two months later, large companies announced their intention to store BTC, which strengthened it to $52 thousand.
Analysis of these and other factors will help to correctly make a forecast but does not always guarantee success.
But still, understanding the reasons why investors have a fear of loss and a desire to invest more is the key to profitable investments.
Ripple (XRP)
One of the most sensational projects over the past few years, and the development of which affairs are monitored by the entire crypto community, is Ripple. Many crypto members were initially skeptical of the project and called it a sсam. However, the project has existed for many years, and now it just breaks all records. Next, we look at its history of upheaval and crypto price recovery.
XRP is the native XRP Ledger token and the cryptocurrency used by the Ripple payment network. Cryptocurrency is needed to conduct operations on the project network. XRP emission is limited. A total of 100 billion coins were issued. Of these, about half circulates in the market.
Some of the funds are in the company's escrow account. The decision to deposit 55 billion XRP tokens there was made in May 2017. The move allowed Ripple to limit XRP's size in the market. Against the background of the decision, the project token began to grow. Every month, a certain amount of XRP is released from the escrow account to maintain cryptocurrency liquidity.
XRP has long been in the top 10 most capitalized cryptocurrencies. At the same time, the coin is one of the few leaders in capitalization who failed to update the absolute maximum against the background of the overall growth of the digital asset market in 2021. One of the reasons for the weakness of XRP could be Ripple's conflict with the US Securities and Exchange Commission (SEC).
The maximum cost of XRP was recorded on January 4, 2018, at $3.84.
On November 24, 2020, the cost of the XRP token on the Currency.com crypto exchange reached a local maximum of $0.78, after which it entered a decline stage.
At the end of December 2020, the SEC accused the California startup of illegally selling securities in the form of XRP tokens. As a result, a confrontation between the parties began. This led to some exchanges, including the American Coinbase, delisting the coin. Ripple CEO Brad Garlinghouse called the SEC lawsuit "an attack on the entire crypto industry and American innovation." He stressed that the company would fight the allegations. After the SEC accused Ripple of unregistered sale of securities, potentially all ICO projects were at risk.
By January 7, 2021, the XRP token on the Currency.com crypto exchange has risen in price from a local minimum almost twice - to $0.37. After that, before the end of the month, it went down, dropping to $0.24. Then there was a pump, as a result of which in a few days the price increased significantly, on February 1 reaching $0.75. The pump occurred against the background of the appearance of the network reports that traders from Reddit are going to artificially overestimate the XRP token.
On February 1, at 16:30, the cost of the XRP token on the crypto exchange Currency.com began to decline sharply, in a few hours the drop exceeded 56%. Against this background, there were massive liquidations of traders' margin positions - they suffered losses of $508 million.
In March, an SEC spokesman stressed that in addition to Ripple and its employees, no investors, exchanges or trading platforms violate the law by selling XRP tokens. Rumors began to appear on the possible return of altcoin to Coinbase.
In March, altcoin rose in price by 37%. But the main wave of growth happened in April.
In a few days in April, the cost of the XRP token on the Currency.com crypto exchange increased by almost 80%, to a three-year high of $1.11. Since the end of December, when the cost of XRP fell sharply to $0.17, this token has risen in price by 580%. It comes after a court opened Ripple access to U.S. Securities and Exchange Commission (SEC) documents for internal use. The company hoped to find evidence that the regulator in the past called the XRP token a currency, not a security.
In 2021, XRP opened at $0.219. In January, the lowest XRP price was fixed at $0.215, and the highest price was $0.499. The XRP, which traded at $0.415 in early March, hit a low of $0.413 for the month, hitting a high of $0.602.
In early May, XRP traded at $1.60. In the same month, the lowest price was recorded at $0.65, and the highest - $1.76. XRP, which traded at $0.7 in early July, $0.64 in August.
In October 2022, the cryptocurrency traded at a price of $0.47.
On July 13, 2023, the SEC lost the case to Ripple. The court did not recognize XRP as a security again. Since then, 21% of the total crypto trade has been in XRP. Over the week, the XRP rate increased by 97%, to $0.938. Major exchanges relisted the coin.
Now the market is undergoing a correction. Last week's record holder, XRP, which soared above $0.8, is now worth $0.69, down 8.5% from a week earlier. At the same time, XRP lost to BNB third place in the ranking of cryptocurrencies.
Dogecoin (DOGE)
Another interesting example of a "jumpy coin" is the memecoin DOGE. In 2013, Portland programmer Billy Marcus and Adobe software engineer Jackson Palmer created Dogecoin (DOGE). The project was conceived for the sake of a joke against the background of the excitement around the main coin of the digital world - Bitcoin, which was actively growing and falling that year.
Dogecoin was officially launched on December 6, 2013, and within the first 30 days, the project site was visited by more than a million people. Dogecoin worked on the existing cryptocurrency Luckycoin, which in turn was oriented by Litecoin. The Proof-of-Work algorithm is used to mine Dogecoin.
Initially, it was conceived that the size of the issue would be 100 billion DOGE. But later, the creators announced that the fee would be fixed for each block, and the total turnover would become unlimited.
Two weeks after the official launch, hackers attacked the Dogewallet and stole $12,000 worth of coins. To help those who lost funds, the Dogecoin community launched a SaveDogemas campaign to collect donations for the victims and raised the required amount a month later.
On December 19, 2013, the price of Dogecoin increased by 300%. At that time, two weeks passed after the launch of cryptocurrency. Only in monetary terms, the dynamics of the exchange rate does not look so significant: the coin has only risen in price from $0.00026 to $0.00095. The rise was due to the ban on investments in Bitcoin for Chinese banks, but this Dogecoin rate lasted three days.
By January 2014, the coin again showed growth and even briefly bypassed Bitcoin in terms of trading volume. In the same year, cryptocurrency managed to enter the top ten on the Coinmarketcap website, but then fell into the fourth dozen on the list.
In 2015, one of the co-founders, Jackson Palmer, left the project. This provoked rumors that the coin would soon cease to exist. However, Dogecoin managed to stay afloat, perhaps not without the help of an active community.
Until 2017, the price of the coin did not change much. This was followed by a short decline, and in December 2017, Dogecoin's performance, like the entire crypto market, rose sharply. Thus, the capitalization of cryptocurrency exceeded $2 billion, its exchange rate reached a historic maximum - $0.017- $0.18. If in January 2017 the average daily trading volume was $188 thousand, then a year later this figure was $227 million.
Throughout 2018, Dogecoin's growth dynamics echoed the market movements. However, at the end of August, DOGE began to grow sharply, when most cryptocurrencies were rapidly losing value. While Bitcoin and Ethereum set anti-records, Dogecoin showed double-digit growth. This allowed the coin to get to the twentieth line in the Coinmarketcap ranking, leaving behind ZCash, Verge, Bitcoin Gold. Dogecoin was at $0.006308.
As a result, on January 7, 2018, the Dogecoin exchange rate reached a peak of $0.017 per coin, and its total market capitalization was about $2 billion. And in July 2020, the price of Dogecoin rose sharply due to a flash mob on TikTok aimed at bringing the price of the coin to $1.
In January 2021, Dogecoin rose in price by more than 800% in 24 hours, reaching a price of $0.07 thanks to the support of Reddit users.
In February, Elon Musk, head of Tesla and SpaceX, joined the DOGE fan community. He raised the coin in the global cryptocurrency TOP-10 by capitalization thanks to his tweets and statements. In July 2021, Dogecoin's capitalization, according to CoinGecko, amounted to $30 billion.
For the first time, Musk and the cryptocurrency crossed in 2019 - then the businessman wrote on Twitter that Dogecoin could become his favorite cryptocurrency. Since February 2021, Musk has consistently mentioned DOGE in his tweets.
The head of Tesla even conducted a survey among his Twitter followers. He wondered if it was worth adding Dogecoin into payment methods to buy the company's electric vehicles. Almost 4 million people took part in the voting, and 78% of them answered the question in the affirmative. As a result, in May 2021, the cost of DOGE exceeded the $0.5 barrier, an increase of more than 20,000% over the year. But after the collapse of the crypto market on May 19, the coin quotes went down. Dogecoin's price fell to a local low of $0.16 on June 22.
In early July, Elon Musk responded to rumors about whether it would be possible to mine Dogecoin on a Tesla supercomputer, which is now in development, and also published several memes about altcoin. DOGE fell 68% after a record rise in May. The coin traded at $0.23.
The DOGE price entered a protracted long bearish cycle, buoyed by the prospect of the Fed tightening policy (leading to actual interest rate cuts in 2022 and 2023). In addition, the collapse of many leading cryptocurrency companies such as Terra (Luna), Three Arrow Capital, FTX, etc., aggravated the DOGE sale.
October 2022 saw a 100% rebound in price despite a months-long downtrend. The recovery coincided with Musk's shaky takeover of Twitter amid hopes that DOGE would become the social media platform's official payment token.
Dogecoin plummeted in December after Twitter users voted for Elon Musk to step down as CEO. The meme coin fell more than 18% after the vote, which Musk himself installed. Users panicked that after Musk left, Dogecoin's partnership with the social network could become tense. As a result, the coin traded at a year-high of $0.14.
However, Musk remained in the management of the company and continued to influence the cost of DOGE.
In April 2023, Musk did not add the possibility of paying DOGE on Twitter, as previously mentioned. Although it briefly replaced the platform's iconic bluebird logo with Dogecoin's official mascot, the Shiba Inu meme, earlier in the month. On this news, DOGE rose 40%.
Over the past two weeks, open interest in the Dogecoin (DOGE) market has more than doubled, surpassing the $500 million mark on July 26 for the first time since April 19, according to data from analytics platform Coinglass. In addition, over the week, the DOGE rate increased by 14.5% amid speculation that the meme token will still become a means of payment for the social network Twitter after rebranding.
On July 25, Dogecoin's daily growth rate was 10%, the highest since April 3. The growth of the exchange rate, coupled with an increase in open interest, may indicate an influx of new funds into the market and the upcoming uptrend.
Marcus Thielen, head of crypto platform research at Matrixport, believes that the market is already entering the phase of the "summer lull," the beginning of which the company previously predicted for August. Against this background, in his opinion, Dogecoin may become the main topic of the season, given that Elon Musk is in the process of "rethinking Twitter."
As of July 26, DOGE is trading on Binance at $0.07837, adding 1.35% per day. The asset is on the eighth line of the cryptocurrency rating with a capitalization of $1.5 billion.
Bottom Line
Thus, we see how coins rise and fall depending on the surrounding factors. We see how the development of the crypto market, the renewal of networks and the weighty word of influencers in business and the media sphere can affect the growth and decline in the value of digital assets. Some situations are fairly predictable, and some are not. Whether today's market leaders will have the same popularity tomorrow is an open question. We only have to closely monitor what is happening with a cold head.
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