What Causes PRV Price Fluctuations?

Help me, and others, understand how the price changes for PRV and what causes drops and rises. We notice and cheer the rises, but like recently when it dropped a couple cents, we worry.

So, what causes these fluctuations?

Most understand what causes price changes with traded assets in an exchange, but Incognito PRV is different. So what are these fluxes and can/how are they better controlled in the future?

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I assume the forces that affect the price of other assets also affect PRV. At the very basic level, when people buy and hold the coin, its price rises as supply dwindles and demand increases. When people sell the coin, the price drops as demand wanes and the market gets flooded with tokens. There are other factors that drive decisions to buy and sell, but at its most basic, those two actions, buying and selling, are ultimately what affect price.

We also have to take in consideration that more and more PRV is being generated. Newly generated PRV increases supply, which, in turn, affects price.

With PRV, if the price drops, it’s usually because someone has traded PRV for another currency (shifting the ratio of the liquidity pool, and thus affecting exchange rates). Why the people traded is a deeper and more complicated subject.

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Exactly how I would have put it @Gold!

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@Gold has a great answer.

I will add that the size of liquidity pools affects how much a buy/sell transaction will affect price, and growing the PRV<>USDT or PRV<>USDC pools can help raise the price of PRV, since there’s more temporarily locked PRV in relation to how much PRV exists, among other reasons.

The recent ~%0.042 decrease in PRV price is likely due to a string of “sells” (read: sell transactions, not “Sales”) that took place, increasing the supply of PRV in the pool and decreasing the USDT, increasing the value of USDT relative to PRV. I don’t know who/why, but selling is a part of PRV in action, and I’m happy to see it. The price will continue to rise and fall, maybe even drastically, at least until the PRV is the world’s default for anonymous crypto. Keep up the fantastic work, everyone!

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@Tryche, @aaron, thank you.

@Clint, I think this part of Aaron’s response deserves special emphasis. PRV is a utility token, and its specific utility is privacy. The coin acts as a veil to keep your crypto transactions private. Basically, you sell one type of crypto to buy PRV, and then you sell that PRV for the crypto you ultimately are after, all under the veil of the Incognito chain.

For example, let’s say I want to trade BTC for ETH, but I don’t want anyone to know about the transaction. First I would exchange the BTC for PRV. PRV isn’t the end goal though, so I don’t stop there. The final step is to sell that PRV for the ETH that I actually want. This is the primary use case of PRV: to be bought and sold in order to veil crypto transactions.

Because of this main use case, you will always see fluctuations, but we can take two major actions to mitigate them: stake PRV, and provide liquidity to the pairs we value most. As Aaron says:

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Got it.

Just curious since we are on a .10 cent drop in 3 days while major coins are all on the up tick.

Thanks for the info.

Good question! Could be people are using PRV to buy other coins specifically because of that uptick.

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Although, it’s worth noting that BTC and other coins see 5-15% fluctuations daily, while PRV has dropped from 89 cents to 82 cents, a roughly 8% spread over three days. It’s unusually fast for PRV, but not anywhere near as volatile as BTC, ETH, etc.

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While the price of PRV is down slightly, it might be a good time to buy up a little more, if you are a staker, liquidity provider, or validator.

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Bought more prv :slightly_smiling_face:

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To be fair, markets are down. People might be trying to invest their holdings in other crypto. It would be a good idea because from what it looks like to me, crypto is gonna explode soon. All I see in the news is about massive companies investing in crypto technology.

This isn’t that big of a deal for Incognito though. Most likely peoples holdings are still going to stay in Incognito and if they don’t want it just sitting there, they are going to invest more money in PRV to provide liquidity. I would say we should increase PRV utility, as a whole. It would be beneficial for situations like this, but it’s not really that much of an issue rn.

Also, PRV seems quite steady compared to how volatile other crypto’s are. This past month has been huge for PRV, which I would attribute to a more widespread adoption of Incognito. It seems to me that Incognito is just in it’s infancy, and this platform will take off gaining lots of attention soon. That means a lot of money is going to be pumped into Incognito which gives more opportunity for the price of PRV to go up significantly.

This is mostly speculation, at the end of the day, who really knows whats going on.

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why this huge price drop recently

I think it’s a liquidity sell off, but long term it won’t necessarily mean much if more people join.

We need liquidity to keep the system strong and PRV strong.

Ideally we get the security audit and some bloggers and youtubers talk about incognito and it’ll turn around abruptly, but right now the community is who controls our own destiny.

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