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Home Tech Cryptocurrency

9 Factors that Affect Bitcoin Price

by Ethan
December 24, 2020
in Cryptocurrency
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9 Factors that Affect Bitcoin Price
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One cannot compare Bitcoin to a bond or stock because, first of all, Bitcoin is not a company or organization. It is not supported by the mainstream government, plus it is not allotted by a central bank. And most importantly, the prices of Bitcoin greatly fluctuate due to supply and demand, the number of competing cryptos, internal governance, and more.

  1. Supply & Demand

Almost anyone is familiar with how this system works. The currency’s rise in popularity would mean a strike in price, while a low demand means a lower price. Countries with no flat foreign charges are able to control the amount of currency being disseminated partly. This is done by altering reserve requirements, adjusting discount rates, and participating in open market functions.

  1. Production Cost

Similar to cryptocurrencies, Bitcoin also sustains real production value, with energy consumption as the most crucial factor. Miners extract the currency with special equipment and a cryptographic math problem that miners use to solve math problems. One block usually consumes 10 minutes before getting verified. The greater number of miners to join the problem-solving task, the more difficult it becomes. And therefore, increasing the cost.

  1. Reward Halving

Unlike fiat money, Bitcoin has set an amount of twenty-one million. The reward will half once there are 210,000 blocks produced. And because of this reward halving, you can also experience a significant fluctuation in the Bitcoin’s price.

  1. Currency Exchange Availability

Bitcoins and other cryptocurrencies are traded over several exchanges, such as Coinbase. Investors are allowed to trade currency/crypto pairs. A network effect occurs if certain exchanges become more popular. It will attract more participants and, therefore, may cause the price to escalate.

  1. Rising Competition

Bitcoin is the most popular and renowned cryptocurrency around the world. No doubt. Its popularity also paved the way for other cryptocurrencies to develop and divert the attention of other miners. It is safe to say that if Bitcoin remains the sole cryptocurrency available, the value might look different. But due to mounting competition, we can see a slight price drop. For more information you can visit here Weed Profit System

  1. Media Influence

Several studies indicate that media serves as the main tool that can make or break a cryptocurrency. Investors rely on it to better understand digital currencies. Good publicity would surely ensure a boost in total value, while bad publicity would have the opposite outcome.

  1. Rules & Regulations

Various types of rules and regulations are implemented by national authorities. Let’s say a certain country is somewhat restrictive on introducing cryptocurrency like Bitcoin. In this case, the overall value may likely to decline. But don’t worry, some countries are friendly to the cryptocurrency market. They consider it legal and are being neutral about its application. Hence, the possibility of increasing the price is passable.

  1. Economic Crisis

The price of Bitcoin also rests on the financial situation of a country. For instance, a traditional economic system starts to downfall. Then they may turn to Bitcoin as a type of capital security. Better capitalization is assured if more people enter the market.

  1. Future Analysis/Developments

The future of cryptocurrencies is indeterminate, and forecasting its price in the future is almost impossible. However, according to its strength indicator, Bitcoin is here to stay for the following years. Thus, investors can expect an upsurge and stabilization in the price. Experts rely on the market cap to determine how the currency price will behave. It is also known as the market value. Higher profits can be earned if the market cap is higher, whereas lower profits can be gained if there’s a sliding trend.

Bitcoin has been providing a good investment to people from all facets of life. And it will be interesting to see the true value it will offer in the next years.

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