Why Supply and Demand matter in Crypto & Forex Trading


In the Financial sector Economics plays a pivotal role and it determines the levels of inflation due to its law. For a company or Country Economy to perform very well, they should make sure they have the best economist who can foresee the future and possible dangers. These day a lot of countries are in deep Economic crisis mainly "Hyper Inflation". Hyper inflation is a result of malfunctioning industries which will reduce the cash inflows and exports, printing of Fiat money which doesn't match reserves and all this will affect the cost of living.

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In the above image that guy filled in the wheel barrow with bricks of money and in exchange he got 1 roll of tissue paper, this i a result of hyper inflation. On the Forex Market the Venezuelan bolívar will be weak against other currencies and most of the times it will be selling. So as a result of higher cost of living and worthless money the Government ended up printing lots of Bills leading to too much supply of Fiat. On the market there will be too much selling pressure and the traders will always work on the bearish order blocks.

Too Much Supply on Crypto Tokens

The Crypto developers are aware of the effects of supply and demand in relation to price that is why they are now relying on deflationary supply. They know that with a deflationary supply, investors will hold the tokens for a longtime while the supply is constantly being reduced due to burning of tokens or buy backs and will later enjoy when the price starts to sky rocket due to low supply and high demand. If a token is on high demand and the supply is low , then investors will sell it for a higher price. So now investors are much concerned in deflationary crypto tokens so that they hold something of value.

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This problem is in the meme tokens because they have too much supply and if that supply does not match the demand then the price will always be low. We saw Dogecoin last year hitting $0.7 mark and it was a big move but there are small chances that it will ever reach $5 per each doge because of too much supply unless it has the market capitalization of Bitcoin.

The same issue happened with Shiba Inu, it got too much attention and was well adopted but because it has too much supply and for it to delete 2 zeros and trade at $0.0015 it has to reach the Market capitalization of Bitcoin. So all these meme tokens with too much supplies  are limited in terms of price growth unless they start to do serious burnming and reduce their supplies.

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