Today, Bitcoin is the most popular form of decentralized currency. Many factors influence the value of this decentralized currency. No organization, government, or group can regulate bitcoin price. Cryptocurrencies are notoriously volatile, especially Bitcoin. If you want to learn everything there is to know about bitcoin trading, go to thecryptogenius.com
The cost of Bitcoin can either increase or decrease by either 5% or 10%. However, the price swings for smaller cryptocurrencies are wider. Cryptocurrencies derive their value from plenty of sources. These sources include demand and supply, production cost, governance, regulations, and competition.
Factors That Affect The Bitcoin Market Price
As mentioned above, there are quite a few factors that influence the price of Bitcoins. Below mentioned are certain important factors that determine the market value of the crypto market. Check out the factors below:
● Demand & Supply: The moment there is a faster increase in the demand for cryptocurrencies than the supply, the price automatically increases. For instance, during drought, the cost and production of grains are likely to increase. This concept of demand and supply also applies to cryptocurrencies. The maximum supply of Bitcoins, on the other hand, is fixed. The popularity of this cryptocurrency will lead to its rise in price. On the other hand, low demand for Bitcoins will automatically lower its value. Many investors, corporations, and people use Bitcoins to conduct online transactions.
● Regulations: With the rapid popularity of Bitcoins and many other cryptocurrencies in the market, regulators are discussing the definition of digital assets. The Exchange Commission and Securities classify it as a commodity and security. The rules should not be too repressive or stringent. If it becomes so, the value of Bitcoins will also drop. If these rules are favorable enough for the crypto market, it will automatically lead to the rapid growth of Bitcoins. Bitcoin is a decentralized currency. So, it cannot be linked to any central government. This is the reason why my rules and regulations might have direct effects on the Bitcoin price.
● Competition with other cryptocurrencies: Bitcoin is by far the most accepted and popular cryptocurrency globally. In the world of cryptocurrencies, there are many competitors of Bitcoin. Two of these cryptocurrencies include Ethereum and Tether. To date, it can be said that Bitcoin is the most valuable cryptocurrency as far as market capitalization is concerned. Competitors such as Tether, Ethereum, Cardano, Binance, and Polkadot are also there.
● Social Media Influence: According to reports, social media directly affects the up and down of Bitcoin prices. With a better understanding of Bitcoin from the common public, the attention towards this cryptocurrency has significantly increased. So, more and more users are regularly drawn toward Bitcoin and other cryptocurrencies. If any crypto investor knows something new about Bitcoins on social media, he will share the same information with other friends. The sharing of information regarding Bitcoins will only increase, thus, affecting the price of Bitcoins. For example, positive news and information on Bitcoins will lead to a rise in the prices of Bitcoins.
● Mining of Bitcoins: The protocol on Bitcoin allows the creation of other new Bitcoins at a fixed rate. Bitcoin miners can process any block of the transaction, thus, adding new Bitcoins to the crypto market. Over time, the speed of the introduction of new Bitcoins has been programmed to be slow. The supply of these new Bitcoins is often affected due to their amount. Once the limitation is reached, there will be no further production of Bitcoins from the miners. However, Bitcoin mining is a rather tricky process.
Besides these mentioned-above factors, other factors are also there that affect the market price value of Bitcoins. The production cost of Bitcoins is another such example. This factor plays an important role when it comes to determining the ups and downs in terms of Bitcoin price. As of 2021, the price of 1 bitcoin is as high as $68,789.63. Such is the value of Bitcoins in the crypto industry currently.
This platform can get you information regarding the condition of the market. It is imperative to be well-informed regarding the crypto market to get a better trading experience with Bitcoins.