Bitcoin, a virtual peer-to-peer system built in 2009, disrupted the financial segment quickly. Transaction history on the blockchain makes bitcoin transparent, and recording the transaction history in the form of hash makes it secure and anonymous.
Unlike the conventional banking system, the government does not manipulate or control bitcoin. Therefore, trading and investing in bitcoin is more fruitful if you know what moves the price charts of bitcoin.
So let’s find out the top nine factors influencing bitcoin’s price. If you are planning to trade Bitcoin, here are Ways To Get Bitcoin For Free.
Any currency is traded in exchanges/marketplaces. Bitcoin is also traded in several such exchanges/marketplaces. Therefore, the trading volume of bitcoin exchanges plays a vital role in determining the price of bitcoin.
When exchanges like Bitcoin Apex experience healthy trading volumes, people are willing to pay more for bitcoin than when these exchanges have low trading volumes. A significant decrease or increase in the number of people using these exchanges can also influence the price chart of the bitcoin pump; bitcoin’s price tends to go up.
Bitcoin Miners’ Rewards
Miners are the backbone of the bitcoin ecosystem; without them, bitcoin cannot exist. They are responsible for broadcasting new transactions in the bitcoin blockchain for getting some transaction fees for their service in minting new bitcoins and giving rewards to miners according to their computational power or mining performance called Mining Rewards or Transaction Fees. When the reward falls from its peak or miners stop working on increasing the block’s size, then demand for bitcoins goes down and the price drops.
Initial Coin Offerings
ICOs are also another critical factor that affects bitcoin’s price. ICO directly influences bitcoin’s trading volume and price by increasing or reducing investor interest in bitcoins. When many ICOs launch in the market, people see it as an opportunity to cash in on bitcoins to make profits through ICOs. But when there are few ICOs that do not provide any opportunity for investors, people tend to lose interest in cryptocurrencies such as bitcoin and their price drop.
Bitcoin Media Coverage
When bitcoin gets extensive media coverage, it tends to make the price of bitcoin pump up to great heights, which makes investors interested in investing their money into it at higher rates. When the media coverage of bitcoin is good with positive reviews such as mainstream adoption of bitcoin, support from developers and entrepreneurs, the possibility to use digital currency in e-commerce and in a lot more places where fiat currency is not accepted, etc., then its price tends to increase.
Negative news about bitcoins, such as high volatility rates and uncertainty regarding their legalization, affects its price chart negatively. Whenever there is startling news about excellent or bad withdrawal transactions of bitcoins, the bitcoin’s price movements are affected negatively or positively depending on the nature of the news. Therefore, the restriction on bitcoin withdrawals will negatively affect the price chart of bitcoin, which is why the government has to decide whether to legalize it or not.
Bitcoin Value Outside The Exchange
Bitcoin’s value is not limited to what it is trading at on exchanges but also helps buy goods and services outside the exchange marketplaces. For example, some physical stores accept bitcoins for shopping purposes, proving them worthy of investment as they have a constant value all the time. Bitcoin is also traded in other cryptocurrencies such as litecoin, and ripple, which prove its high demand and acceptance in the market.
Bitcoin is more useful when people accept it as a payment system and is used widely. When the number of online shops and other physical offline stores accepting bitcoin increases, its price tends to increase. The higher the number of merchants accepting bitcoin as a payment option, the greater will be bitcoin’s price. This factor also decides whether there is no government regulation on bitcoin or not and whether the government supports bitcoins.
Supply and Demand
When there is a high demand for bitcoins, such as when people are willing to invest in them when investors are willing to use them for transactions, then bitcoin’s price tends to increase. At the same time, if there is no increase in the supply of a cryptocurrency, its price tends to drop.
Bitcoin Regulatory Framework
Whenever a government issues a warning on either banning or regulating bitcoin, its price goes down. Governments tend to ban cryptocurrencies such as bitcoin because they have no legal status regarding taxes, bonds and other things.
Competition in the Cryptocurrency Market
Competition in the crypto market is increasing daily; each cryptocurrency has advantages and disadvantages. If another cryptocurrency takes advantage of bitcoin, it negatively affects the price.