Cryptocurrencies work differently from stocks or other traditional investments, so it’s important to understand the basics of what affects their value:
- Supply and Demand: Just like anything else, if lots of people want to buy a crypto and not many want to sell, the price goes up. The opposite is also true.
- Hype & Headlines: News (good or bad) can make crypto prices jump around wildly. A celebrity tweet or a new regulation can have a big effect.
- Usefulness: Cryptos with a real purpose or that solve problems tend to be more valuable long-term.
- Adoption: If businesses and regular people start using a cryptocurrency, that will likely drive the price up.
- The Rules: Governments around the world are still figuring out how to regulate crypto. New rules can cause big changes in price.
Important: Crypto is VERY Risky
Crypto prices can swing up or down much faster than traditional investments. And unlike stocks, there’s often no company or product behind a crypto, so its value is based much more on speculation.
The Big Idea: Think of crypto more like gambling than traditional investing. Do your research, understand the risks, and never invest more than you can afford to lose!
