The sudden increase in the price of cryptocurrency can have many strong effects, both positive and negative, depending on the parties involved. Here are the main impacts:
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✅ 1. Positive impacts
🪙 For investors holding coins
Significant profit: Those who bought coins earlier will immediately profit.
Excited mentality: Price increases often boost confidence and enthusiasm, sometimes leading to "FOMO" (fear of missing out).
📈 For the general market
Increased cash flow: When a coin rises sharply, others may invest in buying following the trend.
Causing other coins to rise (Altcoin Season): A large coin's increase can trigger price rises in smaller coins.
💼 For the projects behind the coins
Increased credibility: Price increases help the project gain attention and attract more investors and partners.
Better fundraising opportunities: It is easier to raise funds when the token price rises.
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⚠️ 2. Negative impacts
💰 For new investors coming in late
Buying at the peak, easy to lose: When prices rise suddenly, many people FOMO into buying at the peak, resulting in losses when prices adjust sharply.
Easily trapped in a price pump: Many price surges are due to whales pushing prices to offload their holdings (pump and dump).
🔁 For the general market
Increased volatility: Strong price fluctuations make the market unpredictable and risky.
Risk of sharp corrections: After a sudden increase, there is often a deep decline, causing panic.
🔍 For regulatory agencies
Attracting government attention: Sharp price increases may lead the government or financial authorities to investigate, regulate, or issue bans.