1st Australian International Conference on Industrial Engineering and Operations Management

Fundamental Analysis of Cryptocurrency Price Fluctuations; A Socio-Economic, Political and Psychological Approach

Andi Faisal Anwar, Baso Iwang, Hasbiullah Hasbiullah & Ahmad Kafrawi
Publisher: IEOM Society International
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Track: Business Management

Cryptocurrency price fluctuations are very complicated to solve. Some practitioners of cryptocurrency traders suspect that socio-political variables also often become the determinants of the price of this digital asset commodity. However, these assumptions are not certain. However, for traders this is actually an assumption to decide to invest in cryptocurrency assets. In other words, the subjective assumptions of traders have become a reference for dealing with price uncertainty in the future, while on the other hand cryptocurrency asset investment is a type of investment that is high risk and high return, with a very extreme level of price volatility. This condition confirms that forecasting future prices is not an easy matter. Requires precise and scientific fundamental analysis. The novelty of this research is to present in detail the fundamental analysis, what factors determine the fluctuations in the price of cryptocurrency assets. Where the results of this study aim to be an investment reference for market participants, including investors, especially for novice investors in investing, so as to minimize risk and get maximum profits. The method used in this study is descriptive analysis, with the N-Vivo tools approach as an analytical tool. The data used is sourced from https://tradingeconomics.com/ which presents cryptocurrency price fluctuations and https://tradingeconomics.com/ which displays economic fundamental indicators. The results of this study found that the economic factors that determine cryptocurrency price fluctuations are determined by internal and external factors of an asset. Internal factors include the amount of supply of crypto coins and tokens, the amount of market capitalization and the utility aspect of the blockchain technology owned. Meanwhile, viewed from external factors, namely influenced by global macroeconomy conditions such as inflation trends, interest rates, unemployment rates, growth, investment, trade balance, debt, and economic recession, including fiscal and monetary policies. Judging from the social variables, the popularity factor (hype), the strength of the community, the role of important figure influencers on a coin and cryptocurrency token are variables that affect price fluctuations. Meanwhile, from a political approach, it is influenced by regulatory factors and deregulation of the legalization and prohibition of cryptocurrency adoption as well as global political instability factors that also affect cryptocurrency assets, for example the phenomenon of war, political sanctions, economic embargoes. Finally, when viewed from a psychological approach, among others, caused by factors of fear and greed and the level of public trust in the market becomes a psychological sentiment for the level of price fluctuations. Thus, it can be concluded that the dominance of economic factors on cryptocurrency price fluctuations is still very dominant in determining market prices, but these economic factors do not stand alone, but there are social, political and psychological factors that influence the cryptocurrency market price. The implication of this research is that market participants should be really careful and conduct in-depth research before making investment decisions, not just fear of missing out (FOMO) buying cryptocurrency assets.

Keywords

Cryptocurrency, Price, Socio-Economic, Political, Psychological

Published in: 1st Australian International Conference on Industrial Engineering and Operations Management, Sydney, Australia

Publisher: IEOM Society International
Date of Conference: December 21-22, 2022

ISBN: 979-8-3507-0542-3
ISSN/E-ISSN: 2169-8767