What is Cryptocurrency?

What Underlying Factors Drive the Bitcoin Price?

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The Bitcoin price USD was about $8,000 at the time that this article was compiled. Its cryptocurrency market pattern has shown that it can experience a stark drop or a drastic increase in a matter of hours. There are many different factors that have a direct influence on its value, the supply-and-demand rates of the online investment community falling among the strongest ones of them.

Users will understand this better not when they think of cryptocurrency exchange rates, like the Bitcoin to Rand, but if they imagine it like a gargantuan trading hive. Digital investors wish to obtain more of the crypto token and create a buzz which drives the official Bitcoin value.

Given the fact that the first cryptocurrency is limited to only 21,000,000 units, most of which are already mined for and exhausted, the public demand ratios are always going to be very high. Some experts even speculate that the crypto coin might one day even have historical and antique value.

Did You Know?

The anonymous creator of the first crypto coin to hit the digital markets and change the digital market for good – Satoshi Nakamoto – was nominated for a Nobel Prize in Economic Sciences in 2015. It is estimated that about 1,000 individuals own 40% of the total Bitcoins that are currently in circulation.

What Drives the Price of Bitcoin?

Changes in the value of the cryptocurrency token are best noticed when the user conducts Bitcoin price live monitoring. But it does not increase and decrease simply because of regulatory impositions and political events. There is also a thing, known as ‘buying the rumor – selling the news’.

Its influence on the Bitcoin price is proven. Whenever a suggestion appears on the Internet, stating that the value of the crypto token will go up, users immediately begin to purchase the asset. This is how standard supply-and-demand levels respond to the cryptocurrency exchange rates.

The crucial thing here is that the value rates might not always go up as was expected. This can lead to an increase in the number of people who start selling the asset. Which, in its own turn, can lead to a drastic drop.

Here are a couple more of the most important factors that affect and drive the average Bitcoin price:

  • The ‘Animal Spirits’ Theory & Trading Behavior: People, much like financial assets, tend to behave in distinct patterns. The same is valid for almost anything in our surrounding environment and in nature. When an avid group of traders, the so-called ‘investing core’, begins to display a particular behavioral pattern, then this means that the majority will most likely follow in the same steps. Bitcoin news shows that all of the rapid increases in its value are derived from increased popularity rates.
  • Crisis With a Country’s Fiat Currency: Anything that is capable of destabilizing a given country’s fiat currency brings forth increased inflation ratios. When this theory is put to practice in terms of cryptocurrencies, we will notice situations like the demand for Bitcoins in Greece following the economic crisis there in 2015 or the same trend in the UK right after Brexit.

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  • Regulatory Impositions: Only several governments have adopted a clear policy as to what to do with Altcoins. The greater part of the world is still dwelling on the matter. This is one of the things that make the Bitcoin value so prone to volatility. Japan’s decision to officially accept cryptocurrencies led to new highs for the top cryptocurrencies by market cap. Quite the contrary, when China decided to ban all digital tokens, their prices followed a downhill trend.
  • Improvements Within the Blockchain: Bitcoin’s underlying blockchain operates on a peer-2-peer open-source principle. It is users, in the form of crypto miners and scrypt miners, that generate the crypto coin by solving mathematical puzzles. And then we have the software developers that are responsible for changes in the protocol or the way that Bitcoin works. But they require the approval of at least 50% of the other users in order to implement them. This is also an important factor for the Bitcoin price.

Follow the News & Stay Updated on the Bitcoin Value!

Making cryptocurrency trading work for the achievement of positive daily financial results requires paying constant attention to the most recent Bitcoin news. Users should do their best to stay updated and never miss out on important events, such as crypto airdrops, hard fork releases or ICO announcements. This is the key to capitalizing on a crypto coin’s average price.

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Jamie Portiss

Hello users, My name is Jamie Portiss. Let me tell a little bit more about myself. I am a Financial Analyst by profession. Having worked my entire life in the financial services sector, I have managed to build a solid investment portfolio. It all began with a Bachelor’s Degree in Finance and right after graduating from university, I began working as a Junior Financial Analyst at a startup company, dealing with financial solutions. I want to bestow our know-how and understanding of the virtual markets (the cryptocurrency exchange, Bitcoin trading, and Altcoin investment spheres, in particular) with users. All that it takes is to do it the right way!

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