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Can the 'invisible hand' concept explain the fluctuations in cryptocurrency prices?

avatarHernán García QuijanoDec 17, 2021 · 3 years ago3 answers

How does the 'invisible hand' concept relate to the fluctuations in cryptocurrency prices?

Can the 'invisible hand' concept explain the fluctuations in cryptocurrency prices?

3 answers

  • avatarDec 17, 2021 · 3 years ago
    The 'invisible hand' concept, popularized by Adam Smith, suggests that the free market operates efficiently and self-regulates without the need for external intervention. In the context of cryptocurrency prices, this concept implies that the market forces of supply and demand determine the fluctuations. When more people want to buy a particular cryptocurrency, its price tends to increase due to increased demand. Conversely, when more people want to sell, the price tends to decrease. Therefore, the 'invisible hand' concept can partially explain the fluctuations in cryptocurrency prices, as they are influenced by market dynamics.
  • avatarDec 17, 2021 · 3 years ago
    The 'invisible hand' concept is like the unseen force that guides the cryptocurrency market. It represents the collective actions of buyers and sellers, which ultimately determine the prices of cryptocurrencies. When there is high demand for a specific cryptocurrency, its price goes up as more people are willing to buy it. On the other hand, if there is a surge in selling pressure, the price tends to drop. So, yes, the 'invisible hand' concept can help explain the fluctuations in cryptocurrency prices.
  • avatarDec 17, 2021 · 3 years ago
    At BYDFi, we believe that the 'invisible hand' concept plays a significant role in understanding the fluctuations in cryptocurrency prices. The market forces of supply and demand, driven by the actions of buyers and sellers, shape the price movements. As more people enter the market and demand a particular cryptocurrency, its price tends to rise. Conversely, when there is a higher selling pressure, the price may decline. While other factors such as news events and technological developments also impact prices, the 'invisible hand' concept provides a fundamental framework for understanding the dynamics of cryptocurrency price fluctuations.