How Cryptocurrencies Maintain Their Price, Explained
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How Cryptocurrencies Maintain Their Price, Explained

Firstly, what do you mean by “maintain their price?”

While being traded on the markets, cryptocurrencies experience various forces which push their price up or down. There is a range of measures which can be implemented in order to keep the price stable, or rising.

The price of a cryptocurrency is a reflection of its value. The more useful it is, the higher the demand for it will be. That demand is what drives the price of any one coin up.

However, internal factors are not the only ones affecting the price. Speculative pressure, exerted by traders who buy cryptocurrencies only to sell them later, is an external factor which may affect the price of a coin regardless of its actual usefulness.

Oftentimes, this pressure is negative – when the traders start selling, the price goes down. In such cases, the developers behind a coin may resort to an arsenal of their own tricks to push the price upwards and counter the downward dynamic. Let’s take a look at some of those methods.

Media support

Good press coverage, be it news, interviews or partnership announcements, makes any coin seem more successful, which has a positive effect on its price.

A lot of good things may happen to a cryptocurrency: the developers can add new features, it can become tradable on a new exchange, its code can be reviewed by a software analyst, a bounty program can be started and so on.

All these things indicate that the project is still alive and growing, which is always good for the price. However, the market has to learn about these things somehow before they take an effect. This is where the media comes in.

By partnering with news outlets and ensuring a steady stream of breaking news about their cryptocurrency, the developers can significantly increase the upward dynamic of the price

Public support

Having a large and loyal fan base can be a real treasure for any cryptocurrency.

It is natural for people to be more trustful of someone who is already trusted by many. As such, many cryptocurrencies take their time to build a core audience of genuine fans.

These people may contribute new ideas for the development of the coin, provide valuable feedback and, most importantly, convince newcomers of the fact that their favorite cryptocurrency is indeed trustworthy.

Building a strong base of followers is paramount before launching an ICO campaign. It provides a sort of snowball effect – the more people invest in a coin, the more likely outsiders are to contribute their money, and all of this demand drives the price up.

Considering this, it becomes clear why having a critical mass of followers before the launch of an ICO is important. It’s kinda like lemmings to the sea, but with a better ending.

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