What makes Bitcoin go up and down
At this point in time, Bitcoin is already a global phenomenon that entails history unlike any other monetary unit in the world. If we consider how and where it all began and compare the story to today’s events, the factual trail could be truly jaw-dropping.
Today, Bitcoin is one of the most sought-after commodities in the world, with its price circulating around the $20K mark already. Although it’s incredibly popular among virtually all people connected to any business, Bitcoin is known to have some serious fluctuations in price. So far this year BTC has been gradually and exponentially growing in value. So, what creates BTC’s famously volatile value?
Short overview of Bitcoin History
The story of BTC starts in 2009 when a person (possibly several people) by the alias name of Satoshi Nakamoto created the first blockchain network. The first cryptocurrency in the world was Bitcoin and it used blockchain technology to perform transactions.
The first several years of BTC were quiet in comparison to current events. As time went by, the technology and concept were upgrading and updating in every possible way. In the beginning, the price of a single bitcoin was a miser and nobody could predict such exponential growth in the future.
As years went by, the price of BTC started to rise, breaking a threshold of $100 in October of 2013 and a $1000 mark in December of the same year. The biggest spike in price happened in December of 2017 when the price reached around $20,000, the same as it is today.
What makes the price fluctuate?
Just as with the stock market and other various types of investments, there are tons of reasons why the price could fluctuate, both internally connected factors and external. As an example, let’s review several of the major factors that affect the price of a single Bitcoin.
First and foremost, the principle of supply and demand applies here in full. As time goes by, because of the “halving” protocols, the production of new Bitcoins becomes harder, thus the supply lowers and doesn’t meet the demand. This prompts a rise in price. Another reason that interconnects with the upper-mentioned supply and demand, is the cost of production.
Since it’s harder to produce new Bitcoins, the costs for electricity and tech, have heavily increased, which translates into the trading price of BTC.
Some other factors that affect the price of BTC
The thing that can also affect the price is the competition. BTC is not the only available cryptocurrency in the world, with the likes of Ethereum and Litecoin gaining serious traction as well. If there is an alternative, the price can always be affected.
Another massive factor in the price change of Bitcoin is the legal and governmental regulations. For example, not long ago the US Government has come up with a clear set of rules and regulations that will simplify the integration of BTC into virtually all businesses of the world.
The result was the rapid rise of Bitcoin from $10K to $20K in a matter of a month. Last but not the least, is the availability on the exchange websites. Availability always affects the price, because if a surplus of BTC is available on the exchange sites, the price will inevitably cheapen, and vice-versa the other way around.