Cryptocurrency acts as a transfer currency. If I want to send someone $1 worth of Dogecoin, I spend a dollar on the exchange, and whomever is willing to give me

Cryptocurrency acts as a transfer currency. If I want to send someone $1 worth of Dogecoin, I spend a dollar on the exchange, and whomever is willing to give me the most Dogecoin to get my dollar wins and sets the trading price. Of course, this is limited by how much Dogecoin people have that they are willing to sell. Mainly its psychology; what people expect to happen determines how they trade and thus what does happen. So you end up with a chaotic system and an unstable currency.