Like other most popular cryptocurrencies, Ethereum has gained huge success in just the last few years. It certainly increases its price, which is not easy to predict. In this, there are a lot of factors that tend to be volatile and even mysterious at times.

There is no doubt to say that cryptocurrencies are still counted as a new asset class. Unlike with fiat currencies and other well-established asset classes, economists still don’t understand all the nuances involved with cryptocurrencies. It’s hard to determine the real value accredited to digital currencies. Therefore, predictions, data, statistics, and numbers are helping in identifying the approximate value.

Usually, when a major financial institution adopts, the price of ETH also affects. Here we discuss in detail various three factors that influence the Ethereum price. So, let’s have a look.

Factors Influencing the Ethereum Price

  • Mining Profitability

Generally, the price of ETH isn’t only regulated through speculative actions but also by mining profitability. Installing a computer to help solve complex math puzzles and you are rewarded with a coin or a fraction of a coin. When you solve a complex problem, you will get an ETH coin. The more strong computing power, the more quickly you can earn money.  No matter what you decide to mine, you have to account for your setup costs. 

By removing any profitability from the appreciation of Ethereum from the equation, the price is to correlate the actual rates of return exclusively with hardware, electricity, and any other costs with running a mining rig.

  • Supply and Demand

Countries without fixed foreign exchange rates can partially control how much their currency circulates by adjusting the discount rate, changing requirements, or engaging in open-market operations. With these options, a central bank can potentially impact a currency’s exchange rate. 

  • Competition

As the competition rises in the market, people are taking interest in various cryptocurrencies like ETH. This well-known currency is still the dominant option with regard to market capitalization. Due to this, the price is continuously on the rise. In addition, new closest competitors are entering the market. On the other hand, new initial coin offerings are also constantly on the horizon. The crowded field for investors is good news as the widespread competition keeps prices down.

  • Availability on Currency Exchanges

The more popular an exchange becomes, the easier it may draw in additional participation for creating a network effect. By capitalizing on its market clot, it may set rules regulating how currencies are added. There are various most popular currency exchanges in the market like Coinbase, GDAX, and others. These platforms allow users to trade, sell, buy cryptos at different prices.

Summary!

There are a lot of factors that can either keep the price down or can rise at a constant level. If you’re a crypto lover and want to invest in ETH, it’s recommended that you do thorough research in advance and keep yourself updated on current crypto news and other information. The more you keep yourself aware, the more likely you’ll get a better result.