It is a well-known fact that crypto currencies like bitcoin is highly volatile and it is nearly impossible to predict the price of such digital currencies. Even, we have seen a huge fluctuation in price of Bitcoin trading in the year of 2018 and it has increased 59% in eleven months. So, investing in these coins and tokens can be a risky venture and you must know the reasons of such price fluctuations.
The Ebb And Flow of Bitcoin: Which Factors Drive The Cryptocurrency’s Value?
There are multiple factors behind this price fluctuation, and you need to know all these factors before you invest your funds in this coin. Here, you can find some common factors that can make such digital currencies ups and down. Here, you can find such factors:
- Supply: First and foremost, the supply factor influences the price of Bitcoins. There must be some shortage in supply of such coins where you can price a huge hike in their price. Investors consider this coin as digital gold because the amount of gold is pre-determined like bitcoin. The Bitcoin miners can mine Bitcoins by solving complex mathematical problems. You should not buy such coins when there is a shortage in supply, and you can buy such coins when an adequate supply is available.
- Media houses: Bitcoin is available digitally and you can find some news scrolling around the internet and social media platforms in every minute about this crypto. However, such news is not genuine and there is some fake news circulated by the large investors to drop the price of such coins. Small investors started selling their coins due to panic and large investors will start buying their coins at less price. So, such news can drop the price of bitcoin and you must keep your eyes in a genuine platform to stay updated. In this case, you can choose a reliable platform where bitcoin trading option is available with enough resources, and you can try in this regard.
- Behaviours of investors: These days, popular retail stores and businesses have started accepting Bitcoins as their preferred payment method. For example. PayPal, Microsoft and Starbucks are accepting this crypto. It is expected that more brick-and-mortar stores including retail chains will accept this coin in future and bitcoin will get a legal status in the market. It can increase the price of bitcoin, as there will be no more controversy.
- Political reasons: People trust on this crypto and started investing their funds in bitcoin due to one reason – bitcoin is not controlled by any government. Political parties can manipulate the price of their fiat currency because they run the government and they have the complete control over their fiat currency. BTC is exceptional because it is a decentralized currency that cannot be controlled by any bank or government. Due to this reason, large investors trying to diversify their portfolio by investing their surplus funds on bitcoin. For example, Greek traders started investing their funds on bitcoin from 2015 when they faced inflation in their economic market. Similarly, large investors of UK started investing their funds when Britain left the European Union. So, political changes can play a crucial role in the bitcoin valuation.
- Government regulation: Government of different states and countries are trying to implement a uniform regulation on crypto. If they successfully create a framework for the crypto market then the price of BTC will get a stable condition and you will not find such fluctuation in their prices. But the price of bitcoin has been affected by some states. For example, China has banned crypto in their country and they have launched their own digital currency in the market. After this declaration, the price of bitcoin was dropped certainly.
Bitcoin has its ups and down, but you need to know how to predict this price fluctuation beforehand. Doing proper research and following up with the recent trends can help the financial investors make much profits out of their investments in Bitcoins and other forms of cryptocurrencies. Apart from that, you must open a crypto account in a reliable and trusted platform to keep your funds safe.