How Does The Cryptocurrency Go Up And Down

How does the cryptocurrency go up and down

Q: How do currency markets work?

A: The FX (foreign exchange) market works very much like the stock market where potential buying parties bid $Y of country 1's currency to buy $1 in country 2's currency.

How does the cryptocurrency go up and down

Potential selling parties sell (ask) $1 of country 2's currency for $Y of country 1's currency. Like the stock market, there are also a swaps, futures and options in this market.

Q: What factors are behind why currencies go up or down?

A: Just like any open market, currencies go up and down based on supply and demand.

What makes Bitcoin and other CryptoCurrencies go up in value?

Many factors affect the supply and demand of a particular currency. Some were listed well by the other posts.

Q: What roles do governments, central banks, institutions, and traders have in the process?

A: It's common practice that gov'ts intervene to "control" the value of currencies. For example, although it's not general public knowledge, the Canadian gov't is actively purchasing up US dollars in the FX market in an effort to stop the US/Canadian exchange rate from dropping further.

This has dramatic economic consequences for the Canadian ecomony if the Canadian dollar were to strengthen too far and too quickly.

answered Dec 16 '09 at 16:49

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How does the cryptocurrency go up and down