What drives crypto prices up or down in 2025

Digital assets are not only about technology — they’re also about wild price swings. For example, in November 2024, Bitcoin was worth $68,000, and just a month later, it surged to $106,000.

Why do such rollercoasters happen? Who drives the sharp market ups and downs? Let’s break it down together.

What Drives Crypto Prices Up

Prices of digital assets rarely rise for no reason. Sometimes it’s due to hype news, but often it’s the result of deeper changes.

Technological Breakthroughs and Network Upgrades

When a project upgrades its blockchain or launches new features, it often boosts community optimism. For instance, Ethereum’s 2022 shift to Proof-of-Stake (the Merge upgrade) reduced energy use almost to zero, sparking a demand surge for ETH.

Recognition by governments and corporations

When a country legalizes cryptocurrency, it signals stability to investors. A strong example is the launch of a Bitcoin ETF in the U.S. in 2024, which let institutions officially invest in BTC. Public investments by firms like Tesla or MicroStrategy also increase market trust.

Interest from large players

When banks, funds, or large companies enter the market, it’s not just about capital — it’s a long-term interest indicator. For example, in 2021, JPMorgan launched a crypto-based fund for its high-net-worth clients, boosting market growth.

Real-world applications

Crypto demand rises when it’s used beyond speculation. For example, Chainlink (LINK) became a key part of DeFi services, supplying decentralized data. Polygon (POL) helps scale Ethereum ecosystem solutions, earning business trust.

Strong media coverage

Any positive news — growth forecasts, big brand partnerships, project updates — can spark a price jump. One example: after news of Visa’s collaboration with Solana, the token rose over 15% in a day.

Tip: Follow official announcements, new tech, and institutional moves — these often start price growth cycles.

Why Crypto Prices Drop

Just like price surges, crypto crashes don’t happen out of nowhere. But unlike steady growth, crashes are usually sharp, emotional, and triggered by clear events.

Regulatory restrictions and bans

Any government action can instantly affect the market. In 2021, China officially banned Bitcoin mining, triggering a miner exodus, reduced hash rate, and BTC crash over 30% in weeks. Investors fear losing liquidity and sell immediately.

Bugs and vulnerabilities in protocols

Cryptocurrency is a software product — and like any code, it can have flaws. In 2022, a hack on Wormhole infrastructure caused over $320 million in losses, damaging ecosystem trust. Such events often cause mass sell-offs.

Falling investor interest

The market thrives on attention. When buzz fades around a project, investors stop buying, liquidity drops, and price falls. If no one talks about a coin, it may be the sign of a fading trend.

Scandals and negative news

Bad news affects sentiment fast. After the FTX scandal in 2022, the market lost over $150 billion in a few days. News of fraud, scams, or investigations into major players often triggers panic selling.

Loss of market trust

When many users lose money due to bugs, scams, or lack of support, fewer new investors join. Complex interfaces, lack of transparency, and volatility make crypto less appealing to the mainstream.

IMPORTANT: Before selling, analyze whether the issue is with the project itself or the broader environment.

Macro Factors That Influence the Market

The crypto market is increasingly tied to global economic trends. World events, central bank policies, and financial crises now strongly affect digital asset prices.

Global shocks

During pandemics, wars, or economic instability, investors dump risky assets. In March 2020, Bitcoin dropped over 50% in days, along with stock indexes. But after central bank stimulus, BTC quickly recovered.

Hawkish monetary policy

Rising interest rates from the Fed or ECB are strong market signals. Higher rates make bonds more attractive, drawing capital from riskier instruments.

IMPORTANT: The crypto market reacts to Fed announcements almost as quickly as traditional markets — follow economic reports closely.

Economic trends

Inflation, energy crises, or de-dollarization have an indirect but visible impact. In countries like Argentina or Turkey, where fiat weakens, crypto demand rises as people seek safe-haven assets.

Emotions that move the market

Crypto is not just about data and charts — it’s a market of sentiment. Emotional reactions often drive price swings.

Fear of missing out (FOMO)

When an asset spikes, investors rush to buy so they don’t «miss the boat,» pushing the price even higher.

Fear, uncertainty, doubt (FUD)

Scary headlines or rumors can trigger panic selling. In 2021, just rumors about a USDT ban in the U.S. caused BTC to drop 10% in a day.

Social media and influencers

Elon Musk’s tweets in 2021 repeatedly caused price jumps and drops. For example, after he said Tesla would stop accepting BTC for environmental reasons, the price fell 15%.

Market manipulation

«Whales» — large holders with millions — can cause artificial crashes or pumps by buying cheap during panics they themselves triggered.

The herd effect

When most traders act the same — buying or selling — it creates avalanche effects. People follow others without deep analysis.

How to Act During a Crypto Crash

Crypto winter isn’t a sentence — it’s just part of the cycle. During these times, it’s vital to stay calm and avoid impulsive decisions.

• Stay calm. Even BTC has crashed before — the market always recovers.
• Study the reasons. Is it a project-specific issue or a broader situation?
• Don’t react emotionally. Think strategically.
• Use risk tools. Diversify, use stop-losses, and lock in profits.
• Learn. Every crash is experience and a chance to rethink your trading approach.

In crypto, the winner isn’t the one who guesses the peak, but the one who manages risk systematically.