How News Affects Cryptocurrency Prices

These days, it feels like cryptocurrency is mentioned more in the news than not—but why are the prices always fluctuating after a big news story? Unfortunately, cryptocurrencies are highly susceptible to several unique factors that can be influenced by the news.

News affects cryptocurrency because it is a driver of supply and demand, an announcement of pending regulations, and a frequent source of scandal exposure. Read on to learn more about how news affects cryptocurrency prices.

1. The News Has Always Driven Supply and Demand

The law of supply and demand is a major factor behind the prices of cryptocurrency—mostly because most cryptocurrencies are considered speculative investments, which are highly driven by market sentiment.

Whether you realize it or not, supply and demand is affected by the news in any industry. Remember how everyone rushed to buy toilet paper during the COVID19 pandemic merely because it was reported by the news that there might be a shortage? This is just one of many examples of how any market can be controlled by news reports, and cryptocurrency is no exception. Just remember that the news can typically only control demand, which, in turn, tends to lower supply.

2. Announcement of Pending Regulations

Even though cryptocurrency officially started in 2009, there are still many places around the world where cryptocurrency is unregulated. As such, news of pending regulations (both positive and negative) can cause prices to fluctuate.

This is an especially hard marker to predict because regulations can be positive—like when Trump was elected president in November 2024  and many suspected he would push pro-cryptocurrency regulations—but it can also be negative too. When news breaks that a cryptocurrency will be monitored by the government, or banned, then this can send the prices spiraling.

Even if the news is positive toward pending regulations, it’s important to recognize that more regulation does not always insinuate that there will be more buyers. For some businesses, more regulation is actually not good for business; however, we find these cases are outweighed by the number of businesses that buy more due to perceived benefits received from pending regulations.

3. News Exposes Scandals

While we wish the cryptocurrency world were free from scandals, it’s not, and news sources are frequently how these scandals, or scammers, are exposed.

Whenever a certain token is featured on the news because it’s come out to be a scam, or that the creator behind said token is a fraudster(hello Sam Bankman-Fried), generally the token will always crash following the news. We wish this wasn’t such a death sentence for coins, especially because news is not always spread universally, but the moment a token is exposed as a scam, we see no reason that people should continue to invest, and the sudden price drop (or crash) unfortunately makes sense.

4. News Sites Perpetuate FUD and FOMO

Both cryptocurrency investors and fiat stock investors have to be careful to monitor their emotional state while trading. FUD (Fear, uncertainty, doubt) and FOMO (Fear of missing out) are states of mind that can cause traders to make rash, or irrational decisions. News sites are, unfortunately, huge aspects of these states of mind.

Sometimes, news sites will report on what is basically nothing (such as a small, sudden dip in prices due to a large sale), but the way they word or present it will cause viewers to panic. It’s important to note that news sites do this on purpose because reporting that something happened but “is normal” isn't how they get clicks or sales.

Because news sites thrive on sensationalism, we generally recommend that investors avoid consuming too much. However, you do have to consume some to ensure you are up to date on the regulations and scams we mentioned above, and we know it can be difficult to ensure you are only consuming the cryptocurrency news that matters and not falling victim to the news’ inclination to stir up drama.

To add another layer to that, the advent of AI has completely wrecked some of the smaller news sites, which don’t want to pay human reporters. As such, things are often reported in error, or purposefully misleading in order to convince humans to consume. If your news site is using AI, it’s best you find a different one because AI does make things up.

As such, we’ve made a list of the best cryptocurrency news sites, but it’s important to remember to consume these in moderation as well.

5. Most News Sites Use Advertising

This brings us to our last aspect of how the news affects cryptocurrency prices. Sadly, we live in a world where most news sites are paid for as a result of advertising.

In general, if you get your news from a site you don’t pay a subscription to, then you are paying for your subscription by being subjected to ads. The difficulty thing is, how ads are presented to us have changed over the years and many people don’t even realize they are being advertised to.

Of course, commercials, printed ads in the newspaper, and sidebar ads still exist on most websites, but did you know these aren’t the only ads you are seeing? There is a new form of advertising where an advertiser can sponsor a post. When they do this, they can hide backlinks in the text, as well as present their product in any light they would like. While they do have to label somewhere that they sponsored the post, the average human doesn’t read their news closely enough to notice. This is called sponsored or native advertising.

This means you could read an entire page about a product, which changes your feelings on said product, without knowing you have been advertised to. While this is a very gray area, and not allowed for all product types, there are many news sources which allow this, allowing certain blockchain or cryptocurrency companies to promote their project to you via a sponsored article. And this, like everything else in this article, can cause cryptocurrency prices to fluctuate.

Overall, we aren’t mad at the way the news affects cryptocurrency prices, as it is simply a necessary aspect of being an investor. However, we urge you to be aware and consume news with care so you know when something reported is something you should listen to, or ignore, for the sake of your portfolio.