What Makes Crypto Rise Or Fall?

Crypto can rise or fall for many reasons. Here's a simple guide to what gives digital assets value and drives their prices.

Illustrations: Dominic Xavier/Rediff

Key points

• Bitcoin's value is driven by its fixed supply, decentralised network, security, global accessibility and growing adoption.
• Different cryptocurrencies have different economic functions, so their value should not be assessed using the same metrics.
• Mining and staking primarily secure blockchain networks by validating transactions and maintaining a tamper-resistant ledger.
• Crypto prices are determined by supply and demand, with adoption, regulation, technology, liquidity, macroeconomic conditions and market sentiment influencing prices.
• Scarcity alone does not create value; long-term value depends on utility, security, transparency, user confidence and sustained adoption.

Crypto is an asset class run on blockchain infrastructure. Each token is designed to serve a specific economic function, and that function determines how it should be valued. Bitcoin is built to be scarce. Ether is built to fuel a network. A stablecoin is built to hold a fixed price. An application token is built to capture value from a specific product.