The value of a given cryptocurrency, token, or non-fungible token is traditionally understood by comparing it to another asset, most likely fiat currency. Due to their nature, cryptocurrency and other decentralized assets depend on supply and demand dynamics. When demand rises, the exchange rate increases, which can be influenced by numerous factors.

Cryptocurrency and other digital assets are most commonly evaluated in comparison to the United States dollar. For example, by properly understanding the value of Bitcoin price in USD, investors, traders, and enthusiasts can make informed decisions when interacting with the market. As volatile as cryptocurrency is, these fundamental exchange rates are generally reliable indicators of its price.

Using Crypto Exchange Rates: Investing and Purchasing

Using a reliable exchange rate calculator, an investor can determine the price of Bitcoin in a widespread currency like the US dollar or any local currency. This tells them how much Bitcoin is worth on the global market compared to a particular area, which can be informative when determining the value of a trade at any given time.

This dynamic is key for investing in cryptocurrencies like Bitcoin. Investors typically aim to buy low and sell high, and this is no different for such digital assets. Since investors can only interpret what Bitcoin is worth at any given time based on its exchange rate with other assets, they rely on calculation tools to determine when they might want to invest. 

Cryptocurrency ultimately aims to become a legitimate global tender, a tool for making purchases just like any other currency. Cryptocurrencies like Bitcoin will likely remain dependent on fiat currencies to determine their value—at least in the near future—so investors will still rely on the exchange rate to know how far a Bitcoin will go in a given market. It is often recognized that the US dollar goes farther in some countries than others, and a similar dynamic could emerge for Bitcoin.

What Influences Crypto Exchange Rates?

As with any investment, several factors significantly impact the value of cryptocurrency and, therefore, the exchange rate. Supply and demand dynamics, investor sentiment, and regulatory developments are especially notable in the crypto market since the asset relies more on-demand than other assets.

Many cryptocurrencies have a limited supply in order to build value—Bitcoin will only ever have 21 million coins, for instance. This creates natural demand, but the asset was essentially worthless when the project first launched. The interest of enthusiasts drove its value until investors accepted it as a legitimate asset. As such, an investor’s perception of Bitcoin’s value can drive prices up or cause a downturn.

The Role of Macroeconomic Factors in the Crypto Market

With the announcement of a potential strategic Bitcoin reserve, the token has entered a period of volatility—causing investors to speculate in positive and negative directions. The announcement brought immediate excitement but also drove some investors to capitalize in the short-term, something which has brought the cryptocurrency’s price down dramatically. Some hope for a quick correction, and others anticipate a long-term recovery.

“The recent 24% correction from [$108,786] has seen the Bitcoin price returning to the neckline resistance of the cup-and-handle formation,” a NewsBTC report read. “The logical next step is for this neckline resistance to serve as support for the price correction, and we could see Bitcoin rebound from here. In terms of a price prediction, Elliott wave analysis and projections put the price target above $130,000, particularly at $139,000.”

Understanding the Risks of Crypto Exchange Rates

Investors who understand crypto exchange rates are typically better prepared to take advantage of market opportunities, but there are unique risks. Cryptocurrencies like Bitcoin are highly volatile, which can result in rapid price gains or losses. An investor may decide to wait for prices to continue rising, only to be hit with a dramatic decline. Predicting these shifts in the market is hardly an easy task.

Due to a lack of regulation in crypto spaces, trading involves a number of security risks. Even regulatory changes significantly impact the crypto market across countries, making the importance of global exchange rates all the more notable. As it stands, the relatively small size of crypto markets makes them more vulnerable to market manipulation and security breaches.

Finding a Reliable Tool for Calculating Crypto Exchange Rates

Regardless of potential risk, a tool for calculating crypto exchange rates is essential in these spaces. A reliable tool gives investors a real-time understanding of market changes, empowering them to react quickly and anticipate future changes. The best tools offer a global outlook on the crypto market, especially as these spaces continue to grow in prominence worldwide.