Topic: Is Bitcoin trading more like traditional stocks as it becomes more mainstream? (Read 141 times)

I have seen Bitcoin and some other crypto currency starting to move into the mainstream financial markets.  Companies like J.P. Morgan, Facebook and many others are talking about tokens.  Fidelity has a cryptocurrency clearing and custody company.  Fidelity Digital Asset Service is adding institutional investors like hedge funds and family office. 

This is a good thing for companies with tokens, and in my opinion especially Security Tokens.  And it is also causing investors to look at investments in tokens just like it would be investing in stocks.

If you would like to read more here is a good educational link  on the subject - https://www.disnat.com/en/learning/trading-basics/stock-basics/what-causes-stock-prices-to-change

But basically, in stock, and I believe beginning with tokens, there are the main four things that control the price of a stock or a token:

1.   Supply and Demand.  If more people want to buy the stock or token then those who want to sell it including the company that issued the stock or token, then the price will go up.  If no one wants the stock or token and there are a lot of people trying to sell it then the price will go down.

2.   What is the earning of the company whose issued the stock or token? Simple market capitalization.  Earnings are revenue and profits the company makes. Any company that is not earning revenue is not going to be around long term unless they can continue to raise more money with the stock or token.  And then the supply and demand part in Point 1 come into the picture.

3.   Investors look at the capitalization of the company, which is the price of the stock or token times the number of shares or tokens outstanding.

4.   And fourth, the industry itself.  Investors will be looking at the cryptocurrency industry itself and deciding by many factors including points 1,2 and 3, if first they even want to invest, and which companies look the best to invest in.

Apply these stock market principles above to any company’s tokens you own and that will give you somewhat of an idea of why a stock or token is going up, going down or just sitting there at the same price.