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Bitcoin Price Fluctuations: Top 5 Things That Affect Pricing And Valuations

How much 1 Bitcoin is worth today is the first question that comes to our mind when we first wake up in the morning.

With its extreme volatility, who knows where the price would be in the span of one good night’s rest.

In 2009, NewLibertyStandard gave Bitcoin its first exchange rate: $1=1,309 BTC. Since then, Bitcoin has never turned back. Yes, there have been many hills and plateaus in the journey, but Bitcoin has stayed true to what it promises to its investors.

Last Wednesday, Bitcoin broke its all-time high record with a new all-time high of $68,000 in the span of two days.

You must be thinking about how Bitcoin can jump rope so high. Believe us; we have asked this question to ourselves several times.

Bitcoin Price Fluctuation

Bitcoin has been available to the public for over a decade, but people are still not comfortable investing in it. The sole reason for such support is its volatile nature. Bitcoin, being the youngest currency in the modern age, lacks the trust of people.

Although the popularity of Bitcoin has never been this high, there are people still waiting for outlined policies to make Bitcoin a safe investment.

The Bitcoin industry is still in its infancy. Hence, even a small volume trade can bring an escalated or steep curve. Below, we have discussed the major factors in making Bitcoin the most volatile investment option.

Factors That Affect The Price Of The Bitcoin

In the process of online trade, Bitcoin remains the most volatile asset to invest in. This volatility makes it difficult for traders and investors to make safe decisions. However, what if we tell you there is a way to understand the nature of its volatility.

Bitcoin;’s price fluctuation depends on several factors. If you can understand these factors, you will be able to get valuable insight into how the Bitcoin market performs.

Factor 1: Supply & Demand

Price fluctuation of anything depends on its supply and demand. Almost everything with value follows the law of supply and demand. Of course, Bitcoin’s value isn’t an exception.

Bitcoin is considered to be limited in the market; this gives Bitcoin comparable value to Gold. Now that we have already said that Bitcoin is limited in the market, when the demand for Bitcoin rises in the market, it creates scarcity. To counter the scarcity, the price of Bitcoin increases.

Factor 2: Competitions

Competition with the other Cryptocurrencies also affects the price of Bitcoin. The crowded space allows for more diversity in the portfolio, making the investment field appealing to investors.

Speaking of competition and different Cryptocurrencies, you can use the bitcoin trader platform to trade in Bitcoin or whichever Cryptocurrency you like. You can even shift all your Crypto assets from one to another with ease.

Factor 3: Cost Of Production

Although Bitcoin is strictly a digital asset, it still needs to be produced. Generally, the cost of producing one BTC is derived from the power consumption during the mining process.

On average, a single block will take around 10 minutes to verify. As more and more miners join the process, competition increases. The cost of production increases with the involvement of more miners.

Factor 4: Regulation On Sales

Bitcoin was launched as a form of digital currency. However, over time, it has found its place as one of the most lucrative store-value assets. This confuses the regulator on how to classify it.

Due to the identity crisis, it makes it difficult even for the government to hold a firm standard. Without a clear classification, governments are forced to change their Crypto regulation.

Factory 5: Media Coverage

Media plays an important role in influencing how other people perceive things. Bitcoin and Media share a special relationship. You can even say that where Bitcoin stands today, the majority of the credits go to the positive media attention.

If you would take a survey today and ask them where they first heard the name Bitcoin, most of the answers you receive will be media.

Final Thoughts

Despite these being some of the significant factors that affect Bitcoin’s price, it is important to understand that this is not the end of the list. The Bitcoin industry is still a growing industry, which means it can change over time.

And as to where the Bitcoin Industry is going and what future it holds, we just have to wait and see for ourselves.

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