Market prices for financial assets are dictated by supply and demand – and cryptocurrencies are no exception. If demand for Litecoin is high, then there will be more traders looking to buy and prices will be pushed up. Conversely, if sentiment turns against Litecoin, then traders will start selling their holdings and the price will start to fall.
Market sentiment can be influenced by myriad factors. Any news relating directly or indirectly to cryptocurrency will affect prices. For example, if there are rumours that suggest a change in regulation for digital currencies, the prices will react accordingly. Similarly, the emergence of new blockchain technologies – including new cryptocurrencies – will also have a knock-on effect for the rest of the market.
Cryptocurrency is known for being more volatile than other financial assets, but fortunately, you can make a profit whether the price of an asset goes up or down. Volatility, therefore, equals opportunity for the savvy investor.