The price of Bitcoin is difficult to predict — sharp ups and downs alternate with no less sharp drops. But why does the price of cryptocurrency fluctuate so much? And who is responsible for these fluctuations? Here are 10 factors that in this way or another affect the BTC rate.
Labor intensity and complexity of mining. The nature of Bitcoin is easy to understand when you compare it to gold. There is little gold in nature, it is difficult to get it, its value is constantly growing. At present, Bitcoin is difficult to mine, the demand for this cryptocurrency exceeds supply, and therefore it is expensive.
The effectiveness of the cryptocurrency itself. Bitcoin has become an excellent alternative to the banking system, since fewer players are involved in a financial transaction when using cryptocurrency. Plus, Lightning technology allows you to transfer funds in the matter of minutes. Thus, Bitcoin ‘s performance is a key factor in predicting future prices.
Psychological factors. The Bitcoin price is determined by many psychological factors. Investors are influenced by other investors’ mood, and just those around them. After all, if everyone around you have bought Bitcoin s, and you have not yet, this cannot but influence your position, and this social pressure is one of the most noticeable factors moving Bitcoin forward.
Bitcoin is beyond government control. No government can control Bitcoin , and the point is not that someone does not allow them — it’s just how it works. The Bitcoin network is so large that, even by connecting all the supercomputers in the world, it will not be possible to control even half of the system, so governments do not influence the Bitcoin price.
Spread of blockchain technology. As the popularity of blockchain technology grows in general, Bitcoin also grows in price, as these are related things.
Social media influence. Even the attitude towards cryptocurrencies on the part of various social networks affects the Bitcoin price. Imagine that a friend of yours spreads the news of a price cut on WhatsApp and Facebook – of course, this will affect the opinion of his fellow cryptocurrency users. Thus, in addition to regulation from above, there is also self-regulation.
Bitcoin usage popularity. Bitcoin is valuable because it has a large number of beneficiaries. Why would you need Facebook if you don’t have friends? Likewise, with Bitcoin — the driving force behind the development of the coin is the social connections and involvement of millions of people.
The further development of Bitcoin will inevitably affect on its spread and then the cost. Among the innovations that greatly affect the cryptocurrency usability, it is worth mentioning bitcoin ATMs and exchange-traded funds (ETF), enabling bitcoin trading using standard exchange tools.