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Cryptocurrencies are traded like stocks or commodities, and their prices are driven by basic market forces: supply and demand. The price of a cryptocurrency depends on how much interest there is in buying it (demand) and how much of the currency is available to buy (supply). The balance between these two factors determines its market price.
When demand for a coin is high but supply is limited, prices rise. Sometimes, this demand exceeds the coin's true value, which is referred to as the coin being overbought. On the other hand, when large quantities of a coin are sold off without a strong reason, it becomes oversold, driving the price down.
Related: Learn Crypto Series: What Are Crypto Airdrops?
CRYPTO PRICE ESSENTIALS:
- Price is determined by the relationship between supply and demand.
- Most cryptocurrencies have a limited max supply.
- Overbought coins are in high demand and tend to be expensive.
- Oversold coins have a large supply and are often underpriced.
#leancryptoseries #overbought #oversold
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