Bitcoin is the first decentralized digital currency, otherwise known as a cryptocurrency. In 2009 Satoshi Nakamoto created bitcoin by being an unknown person. The price of bitcoin has fluctuated more than most currencies for various reasons. These reasons include speculation about future expectations, uncertainty on global stock markets, and political tension in some countries worldwide.
Bitcoin has reached several highs recently, but these increases have not yet reversed its downward trend over the past few years that started after its record high on December 17th, 2017, of $19357 per bitcoin. The currency fluctuations of bitcoin are primarily due to the factors that are liable for the prices of such an asset. Unfortunately, there is a fair amount of uncertainty about these factors, and it is hard to understand what might affect the value of bitcoin.
Here are Some Most Important Factors
Issues in this market can significantly inflate or deflate bitcoin’s worth. For instance, if too many people get into bitcoins, its supply will increase and cause its worth to go down. However, if just enough people buy or sell their coins through how bitcoin affects e-commerce, they might be able to control the price with their effect on demand and supply.
Interest in Bitcoin
Some believe that the interest in bitcoins will increase, but too many factors can change this interest from one person to another. So even though more people will get interested, this may also mean that many people stop using bitcoin.
The demand for bitcoins is mainly influenced by their use as a form of payment. People use it as an alternative currency or an asset to store value. This can make its price go up or down depending on how much they need for such an asset to increase or decrease.
Media Attention on Bitcoin
Media attention is one of the primary ways people can learn about bitcoin, but this does not mean that they will begin using it. The hype about bitcoins can make its price go up for a short time, only to drop off again. People usually get hyped up about such new products, but they do not get used to them.
Confidence in Holding and Trading Bitcoins
Bitcoin owners need a lot of confidence in storing and trading their coins because if they lose confidence, their coins will have less value. Like any other currency, changes in the way people feel about bitcoin can significantly affect its price.
As you can see, various factors affect the value of bitcoin, but it is hard to understand which one will make its price go up or down shortly. So even if you think you know what is going to happen with bitcoins, for now, their prices may drop later in a way that will surprise you.
Other Necessary Aspects Related to Trading of Bitcoin
All of the factors that affect Bitcoin’s price positively affect it. For instance, if many people buy bitcoins, their price will rise. However, the demand for bitcoin does not always go up; sometimes, it decreases. This means that if more people have bitcoins than before, their value will decrease if they keep selling them to get money to spend or invest in other things. Therefore, predicting the rate of bitcoin and fluctuations is challenging, and also it is in terms of factors responsible.
You might have been able to predict what will happen with your investments in the past, but you cannot tell what will happen with bitcoins for now. While you can read the news and talk with other people who own bitcoins, you still have no idea if they will be worth more or less in the future. Since there is no way of knowing what will happen to them shortly, there is a possibility that you will make a loss from buying or selling them.
Many people are not interested in investing in bitcoins because they fear spending money on insured assets and are not ready to risk. Some people who buy bitcoins even lose their money on such assets due to price fluctuations.