Bitcoin can be a digital asset made by Satoshi Nakamoto. All transfers are done between network nodes with cryptography. Then these transactions are kept in a dispersed public ledger known as the blockchain. They are there in a fixed number. There are 21 million bitcoins in total.
They are made as an outcome of mining. They can be used for other coins, products, and services transactions. As of February 2015, over 100,000 vendors take bitcoin as payment. The Price of BTC has been a hot topic lately. On December 17, 2017, the cost of one BTC hit a high of $19,343.73. January 17, 2018, the price had fallen to $10,848.57. Many people ask why the price fluctuates and what it will do in the future. You will explore some factors that may affect the price.
Factors that Affect the Price
The price of BTC is gauged by the supply and demand in the market. The number available for purchase is determined by the algorithm that creates new bitcoins, which halves every four years. When demand for BTC goes up, the price goes up. When the market falls, so does the price. Its popularity has caused its price to increase rapidly.
The global economy also affects prices. Investors look for alternative investments when economies are strong and BTC prices go up. Conversely, when economies are weak, investors pull their money out of alternative investments, and prices go down.
Bitcoin prices are not set in stone, and there are a variety of factors that can affect the price. One such factor is government regulations. Different nations have different laws and regulations regarding cryptocurrency and bitcoins.
Over the years, bitcoin’s price has increased as more people have become interested in it and its potential uses. The cost can also be affected by public perception. There is no fixed value for this, and if people think it is a highly valuable commodity, its price will start rising. The rate will start dropping if people don’t believe in BTC as a currency with no tangible value.
Bitcoin’s price is influenced by global awareness, trading volume, media coverage, and regulatory decisions. There is still a lot of the investing population that is not well aware of cryptocurrency. These people might have heard about it but don’t understand the concepts of cryptocurrency. As the awareness about crypto increases, the price of BTC will also increase.
Why Are BTC Prices So Volatile?
Bitcoin rates are highly volatile and can be affected by various factors. Some of the critical factors that affect bitcoin rates include:
- The higher the currency’s perceived value, the higher the bitcoin rate increases. This change in value is due to the limited supply of bitcoin and its increasing demand.
- The more people who want to buy bitcoins, the higher the supply and demand rate for bitcoin will go up. Conversely, the rate will drop when there is more supply than demand.
- With much media attention on bitcoin, the rate increases as investors become more interested in buying it. However, the rate drops when negative news hits the media as investors sell their bitcoins.
The rate of Bitcoin is incredibly volatile and can change drastically in a short period. Therefore, studying and understanding the if’s and but’s present is essential before investing in cryptocurrency. In addition, the rate of bitcoin as an asset will change when more investors believe in the project.