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What affects the Bitcoin price?
Bitcoin is ultra-volatile in its nature. It means that the BTC price may bring traders and investors many surprises. In 2017, for example, the Bitcoin surged by more than 220 per cent and reached almost $20,000. In the opposite direction, the price of Bitcoin slid sharply down during the so-called “Crypto Winter” of 2018, when it lost more than 60 per cent, sinking to a $3,000 level.
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Major BTC price drivers
Bitcoin price complies with the law of supply and demand. Bitcoin supply is sometimes compared to gold, as there are a limited number of Bitcoins (the same as the quantity of gold) that can be mined – 21 million. The demand side here works the same as with any other asset: the more investors are willing to enter the Bitcoin market, the higher Bitcoin price.
Media is the most important weapon and source of influence on the price of Bitcoin and other cryptocurrencies. Greater awareness boosts people’s understanding and drives investors’ interest. With the news spreading like wildfire, the BTC price can be significantly hit by the mass effect of some important media news. Always keep abreast of the latest Bitcoin news to catch the best trading opportunities.
Political events can also drive the Bitcoin price in either direction. Generally, the change in BTC price is opposite to what happens to fiat currencies. Instability of central bank currencies makes people more interested in alternatives, such as Bitcoin and its peers. Bitcoin, keeping the leading place on the cryptocurrency market, becomes the crypto of choice for numerous investors.
Bitcoin and cryptocurrencies are still considered new concepts, difficult for governments to absorb. Many countries are still changing cryptocurrency regulation on a regular basis. Although Bitcoin is independent and decentralised in its core, regulations may affect investors in cryptocurrencies. Therefore, government decisions, such as closing crypto trading platforms or vice versa, adopting crypto at a state level, may cause a Bitcoin price change.
Bitcoin price instability may also be affected by the Bitcoin community in its effort to reach consensus regarding Bitcoin future development. The decisions influence the Bitcoin blockchain and the entire Bitcoin ecosystem. Lack of consensus leads to a hard fork, which is a separation of Bitcoin into two separate blocks, each following different rules. This is how Bitcoin Cash was created.
Started in 2009, Bitcoin is the world's first decentralised cryptocurrency. Invented by an individual or a group using pseudonym Satoshi Nakamoto, Bitcoin shaped the cryptocurrency market and paved the way for other crypto platforms.
The first decentralised digital payment system in the world, Bitcoin is powered by blockchain technology. There is a finite number of Bitcoins that can ever be mined - 21 million. This number is hard-coded into the system. Today, miners produce a new block every 10 minutes and get 6.25 Bitcoin as a reward.
Bitcoin is the leading cryptocurrency in terms of market capitalisation and the most expensive one. The current Bitcoin price hovers around $9,200. Analysts consider 2020 to be an important year for Bitcoin and make positive forecasts regarding its future price. As of June 2020, Bitcoin capitalisation was worth roughly $169.9 billion.
Bitcoin can be stored in different crypto wallets. You can choose the so-called "hot wallets" (software applications), or "cold wallets" (special hardware devices). While hot wallets are considered more agile for exchanging crypto, cold wallets are viewed as a safer option to store your coins for a long period of time. In each case, Bitcoin wallets are secured cryptographically, and in order to transfer your BTC, you should have a "private key";.
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Bitcoin use cases
Bitcoin has become a strong alternative to traditional fiat currency, when it comes to digital payments. You can even buy a cup of your morning coffee with BTC.
Bitcoin price is always volatile, giving strong potential for speculation. BTC is the most popular cryptocurrency among traders, who trade and profit from Bitcoin price swings.
Store of Value
Bitcoin has proven to be a lucrative investment. According to Delphi Digital, in 2019 Bitcoin was labelled the “King of the Asset Class Hill” with 60 per cent growth in less than two months.