If you’re a newcomer to crypto, then there are a few things you need to know.
First thing: cryptocurrency is volatile. Duh. You probably didn’t need to hear that again, but it’s important to reinforce because the next thing you need to know is why it’s volatile.
There are several factors at play here. Supply and demand, government regulations, social media hype, trends, as well as investor and user sentiments. Those last few factors are perhaps the most important – and certainly the hardest to get your head around.
A lot of people in the crypto-verse will tell you that the general consensus of the public means something and, at times, should even dictate where you are investing your money.
But what exactly does it mean, and should it be taken seriously?
The Thing About General Consensus
For starters, general consensus is inevitable. As of 2023, there are around 425 million active cryptocurrency users around the world. If you were to click on cryptosoho.com, look at the prices of different tokens, read reviews, and get a feeling for the crypto world in the present moment, you would inevitably form an opinion about it.
You and millions of other people. Because many of these opinions will likely be the same, this forms a consensus on crypto – both on a broad and direct level – and this consensus then spreads throughout the internet.
Because cryptocurrency demands a number of trading strategies – many of which are high-risk – this consensus is then used as stock behind decision-making. Where do people think XRP is going to go in the next few months? Okay, I’ll invest in that direction.
That investment could mean XRP is boosted or moved away from, which similarly raises or lowers the price, depending on how many investors are swinging one way or the other. General consensus has an impact in the cryptocurrency market, but that doesn’t necessarily mean it has credence.
The Rights And Wrongs Of General Consensus
As ever in the world of public opinion, opinions differ, and this could be a problem for you if you choose to give weight to crypto consensus. To give an example, if you were to type into Google: is Bitcoin going to fail? You will be met with several big news outlets with headlines like: “Why Bitcoin Is Doomed To Fail”, “The Brutal Truth About Bitcoin”, and “Here’s Why Bitcoin Will Fail To Deliver”.
On the other hand, if you were to type into Google: is Bitcoin going to succeed? You will be met with several big news outlets with headlines like: “Why Bitcoin Will Succeed”, “5 Reasons Why Bitcoin Will Never Be Beaten”, and “Bitcoin Could Become The 21st Century Gold”.
The conclusion? This is cryptocurrency, and no one really knows where crypto is going to go. Public consensus, in this way, is never going to give you a definitive answer. Sometimes the same news outlets release articles swinging both ways, just to cater to two kinds of people – the optimist and the pessimist.
Absorb But Be Aware
The same goes for social media. Sometimes users will be excited about where a coin is headed, other times they are doom-orientated. Sometimes, even, crypto and social media is a paradox. Users will form a pessimistic or optimistic opinion on a coin because others have the same opinion, and this opinion then spreads like a domino effect, and the coin does indeed fall or rise because of it – seemingly justifying the opinion in the first place.
At times, it’s hard to understand. The important thing to know, however, is that general consensus does affect the crypto market – but that doesn’t mean it’s correct. That’s why it is crucial to form your own educated ideas and don’t be too swayed by other people. Don’t ignore the noise; that’s not what we’re saying. Listen to it, but always trust your judgement and investments. That’s what really matters.