What Determines Token Price?


The world is becoming increasingly tokenized, and concept of a token actually underpins the new digital economy. While cryptocoins are alternatives to traditional money, tokens are programmable assets or smart contracts that can store several levels of value.

Today our talk is about the reasons that determine the rise or fall of the token price. The factors or reasons are not as simple as it seems. The Vice President and Director for International Development of DAO Consensus Sergey Panchenko shared his view on the real reasons for the rise or fall of the token price that are relevant today:

Does the release of a token affect its development? Perhaps, but in what situation?

For example, there is a token whose emission is 866 665 261 604. But nothing prevented it from making an increase at the moment of 400%. And there is another token with the issue of 36,666, but it made more than 136,681%.

Therefore, the fact is that development does not depend so much on emissions. After all, there was growth both there and there. Here the purpose of the asset itself affects, which in turn will give not the price, but the value, since the price generates value.

In terms of capitalization, we are not a corporation on earth with a capitalization race.

Let’s look at examples: bitcoin, do you think it is the largest cryptocurrency due to capitalization? There is a token with a capitalization of 900 times less than bitcoin, and its value is $43,000 at the moment.

And at the time the bitcoin price is below $20,000, this asset was more than $47,000. Therefore, capitalization is just a drop in the ocean of the price and value of an asset.

Now let’s go through the product, but what is a finished product?! Why do you think the Binance token grew 670% in less than a month?! The answer is simple, they provided not a product from themselves, but a solution based on market trends, namely DeFi

After that, not demand, but the need for their token increased due to its use in liquidity pools and farming. Therefore, the product and the solution are different things.

There are cool decentralized exchanges, but their tokens cost around $2. Therefore, now there is more value in solving the problem of the developing new world of cryptocurrency based on version 2 of DEFI.

Let’s analyze now the next topic: listing on stock exchanges. Do you think the more exchanges there are in a token listing, the better? Not really? It all depends on the strategy and focus of the exchange.

For example, the same Binance or the rest of the top 10 centralized exchanges gives the token a kind of status, given their influence on the market. But, given the new trend, it is more convenient to attract a greater coverage of investors and funds on decentralized exchanges, since there are no verifications and registrations.

Therefore, only 2-3 exchanges and top analytical platforms like CMC are enough for the development of the token (coinmarketcap, which, by the way, was bought by Binance or CoinGecko. Basically, the marketing game of news and memes goes on.)

Development team?

Conducting analytics and studying the market, I do not agree 100% directly with this, since there are ambassadors in this area, whose word or post can launch the token into XXX.

There were projects from good teams, but they didn’t go far. Key people don’t always play the main role. The correct tokenomics and roadmap play more here

The problem of the growth of tokens in their holders, who did not realize the potential of the asset that is in their hands and what states it can give in the future

Imagine: you bought an apartment, and you yourself left to live in a house. Hence the idea of selling the apartment, getting money and leaving. And an entrepreneur will rent out an apartment, keeping the asset and its value at home, while the apartment will start working for him and bring the house income.

This is the whole idea of the current direction of cryptocurrency.

This is what truly affects the development of the token and the project. Patriotism in the token will create everything else»


Related Posts