Factors that affect the price of Bitcoin or BTC USD

Factors that affect the price of Bitcoin
Factors that affect the price of Bitcoin
As a currency that has an exchange rate against other currencies, Bitcoin price movements also show fluctuations.

Even this is not uncommon for users to use Bitcoin as a forex trading asset.

But of concern, the price of Bitcoin turns out to be moving in very sharp volatility.

In fact, the phenomenon of changing prices from 1,000 USD to 10 USD / BTC in a day is not surprising.

Why are such conditions understandable in the Bitcoin market?


As we know, the price of Bitcoin / US Dollar (BTCUSD) today is at the level of 7,837.61 USD.

Where in previous years was amazing, for example, in early 2018 the price of bitcoin was at a high level, and at the end of 2018 and in 2019 then bitcoin declined?

In fact, since it was first launched, the price of bitcoin rose enough to be between 300 USD in 2015, who would have thought if at the end of 2017 to touch 19,000 USD.

Then it fell again to 3,000 USD in early 2019 and now it rises again to 7,000 USD. So in 2020 where do you go about Bitcoin?


Of course, the significant price growth influenced by several factors and important points that support it, this time we will discuss some important points about the factors that affect the price of Bitcoin.


How Did Bitcoin Prices Grow?


Bitcoin created in 2009 with an initial price of only 0,001 USD, then for four years until 2013, there was no significant increase.

Prices only rose slowly with slight fluctuations over the past four years.

In 2013, Bitcoin attracted much attention because of the Cypriot banking crisis that occurred in November 2013.

Chinese people started to buy Bitcoin (BTC) in large quantities, thus making the price increase by 1,000%.

However, the increase did not last long. In February 2014, there was a DDoS attack on the Mt. Gox which at that time controlled about 60% of Bitcoin transactions.

This incident was a hard blow to Bitcoin, which made the price drop by 40%.

Throughout 2014 to January 2015, the incident continued to drive down the price of Bitcoin.

During 2015, Bitcoin gained popularity slowly but decisively, and prices began to rise little by little.

In May 2016, Bitcoin gained the trust of many people, and the price continued to rise.

Then in May 2017, the price of Bitcoin continued to rise sharply, from the May low of 1,341 USD to the October high of 5,864 USD.

Then it fell again to 3,567 USD in early 2019 and now it rises again to 7,837 USD.
Bitcoin price growth has increased by about over 400% in just six months. I cannot find a movement like this in forex trading or commodity trading.

Knowing what factors affect the price of Bitcoin is not only useful for traders' analysis but also for Bitcoin users who use this digital currency as a medium of exchange.

Drastic changes in the price of Bitcoin in a short time can make you feel trapped, especially after buying Bitcoin, but the price has suddenly dropped so that the value is not enough to be used to pay for the goods you want.

If you panic, you might immediately buy Bitcoin again to get an equivalent value. And if you know the determinants of the price of Bitcoin, you can estimate when the price of Bitcoin can rise again, so that the value will buy the desired item.

So what are the factors that affect the price of Bitcoin?

1. Trader Speculation

Believe it or not, the number of Bitcoin users who make it a trading asset is more than those who use it as a medium of exchange. This is because the relevance of Bitcoin itself is still minimal, so its use has not spread and is familiar to the wider community.

For example, you might have trouble finding the nearest store that accepts payments with Bitcoin. As a result, many users then prefer to use Bitcoin as a trading instrument in investment activities.

Because the main aim of traders is to enjoy Bitcoin price fluctuations, they are the party that response most quickly to a global issue. Whether manifested in buy or sell actions, actions that are often speculative are a big influence on Bitcoin volatility.

News such as a country's refusal to legalize the use of Bitcoin can have a bad impact, so it is not uncommon for Bitcoin traders to respond by opening sell orders.

Conversely, positive news such as the increase of large merchants such as Amazon who accept Bitcoin can welcome the purchase of Bitcoin in large numbers by traders.



2. Supply and Demand in the market.

Actually, the physical market and the digital market always influenced by the law of Supply and Demand.

If there is more supply than demand, the price will go down, and Vice versa.




3. Bitcoin Volume and Distribution

As a digital currency that is still fairly young, the volume of Bitcoin is still tiny when compared to other assets such as gold, especially conventional currencies such as the US Dollar.

As of the fourth quarter of 2015, the number of Bitcoins in circulation was only around 14 million, or far less than the total US Dollars which reached 1.3 trillion USD.

Why does this volume greatly affect the movement of Bitcoin? To see the relationship between the two, we can first understand the basis of Bitcoin fluctuations determined by supply and demand in the market.

If many people buy Bitcoin in large quantities, the price will rise sharply. Conversely, the value of Bitcoin can plummet if many owners take large amounts of selling.

Well, because the volume of Bitcoin is not much and its circulation is uneven, the movement of Bitcoin is very sensitive to the actions of its holders. When someone buys or sells Bitcoin in large quantities, the price can move to an extreme.

If the volume of Bitcoin increases and the distribution evenly distributed, the volatility will naturally slow down.


4. Fraud Mode Involving Bitcoin

Because of its great potential, many irresponsible parties then make Bitcoin the object of new fraud involving investors. They will persuade potential investors to entrust their Bitcoin with the lure of growing profits periodically.

In fact, if you learn a lot from cases of financial fraud that have cost investors a lot, such a mode should immediately watch out for. The first to the third month there may return shown, but the next you will have trouble contacting the account manager. The investment company disappeared without a trace by taking away the money of all its clients, including your Bitcoin.

Cases like this happen a lot and have a bad impact on the price movement of Bitcoin. Unknowing investors will spread information that Bitcoin is a scam, even though what deceived them was a sham investment company.

If it's like this, then the level of trust in Bitcoin will fade and automatically lead to price reductions. We can take an example of this from a large-scale fraud scandal committed by the MyCoin company from Hong Kong.


5. Total Amount of Bitcoin and Its Holders.

The maximum total amount of Bitcoin is 21 million, although it produced in stages.

There are currently around 16 million BTC and over 14 million people have wallets with BTC.

Because the number of Bitcoin fixed, but people who want to have it more and more, the price will continue to rise.


6. News or fundamental issues

Lots of news can affect human factors or market sentiment in the cryptocurrency market.

For example, news of the arrest of Ross Ulbricht, the operator of the Silk Road site, which uses Bitcoin a lot, has caused the price of Bitcoin to fall by 25%.


Although there are several other factors that can influence the movement of Bitcoin, we can consider things as the main cause. In conclusion, Bitcoin is a currency whose value is very sensitive to global news and is still unstable in responding to the sentiments of traders and users.

Therefore, by studying the factors that affect the price of Bitcoin, it hoped that you can make it a matter of consideration before you buy or sell Bitcoin.

Bitcoin crypto assets laptop walpaper
Bitcoin crypto assets

What is the Guarantee of Bitcoin?

Bitcoin has no guarantee in the physical world. Bitcoin not supported by precious metals or international agreements. But Bitcoin has all the characteristics of money, such as

Portability.

Individuals can carry money or make transactions easily. Longevity. Bitcoin is eternal. It does not limit the existence of Bitcoin to the system but will exist as long as the technology used is still there.

Uniformity.

All Bitcoin is the same. Nobody can distinguish one Bitcoin from another. Every BTC has the same value and price. Divisibility. I can divide each Bitcoin into small sections. These little Bitcoin fragments are called "satoshi", with a value of 1 satoshi = 0.00000001 BTC.

Security.

It protects bitcoin from forgery, theft, and changes in transaction information, through protecting the Blockchain system.


Recognition.

Everyone can easily distinguish Bitcoin from other cryptocurrencies. Bitcoin users are already very many, so this cryptocurrency can buy or sell goods and services, as well as to pay for college fees and raise donations.


What will happen to the Price of Bitcoin?

It is very difficult to predict with certainty what will happen with the price of Bitcoin in the future.

Any currency can be the object of collapse. In history, we know that there were several currencies that were devalued and collapsed, such as the German Papiermark or the Zimbabwe Dollar, then followed by the Venezuelan state currency.

In a short amount of time, the price of the currency dropped almost to zero. As a result, the two currencies are no longer used because the prices of goods and services have risen rapidly and disproportionately.


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