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Factors that Affect the Bitcoin Value

Factors that Affect the Bitcoin Value

Programme B
Published by Programme B

Bitcoin is a very popular digital currency that is not controlled by any authority such as banks, governments. It still has not got acceptance of the world completely but it has won the heart of traders and investors. 

But at the same time, any individual can use Bitcoin to conduct transactions if some terms are mutually agreed upon. You can also trade and bought bitcoin on exchanges. We find a large number of investors buying Bitcoins through various virtual currency exchanges. Digital currency is not completely legalized in all countries.  At the same time where many countries are adopting it, There are many countries where Bitcoins are banned.

A detailed report from the Library of Congress of the United States sheds light on the regulatory situation of Bitcoin in different parts of the world. Everyone knows that bitcoin is a very good and safe investment and it has proven itself very well.

When bitcoin has launched the maker of bitcoin did not set its official price. As a result, it was never sold as regular currency. Its price began to develop when the first exchange was created.

Initially, the bitcoin price was as small as a few cents.

Gradually, Bitcoin began to boom regularly until 2013, and the price of Bitcoin in October 2013 reached $ 123.50, and since then, the currency has continued to rise, reaching a price of $ 140 in April and exceeding $ 1,000 by December of the same year. We see the ever-increasing value of Bitcoin attracting more and more traders to it.

Factors That Impact Bitcoin’s Price

Nobody determines the price of Bitcoin precisely. The market determines its price. This process makes pricing currency more complicated as the price differs on each exchange. You can understand it by researching the price of Bitcoins on the Internet and you will find different prices for Bitcoins on different exchanges. They will be never the same as per forex trading exchanges; different exchanges have different price of gold. 

These are all bundled prices so it’s impossible to trade Bitcoin on these index sites. The price or value of any digital currency depends on the liquidity of it means how much is this currency active in the market. There are a lot of markets and exchanges that provide bitcoin services like https://bitqz.org/, they charge for their services differently and normally set their average price. 

These indexes collect data from different crypto exchanges and then take the average value to send in the market. However, not all indexes perform the same practice of data collection. Traders interested in buying or selling bitcoins will choose an exchange of their choice that will display its average price. Bitcoin’s price is subject to frequently changing as it depends on price information received from different exchanges.

Liquidity and Price of Bitcoin

The liquidity of any currency including digital currencies depends on its liquidity. Which means how much this particular currency is in demand. They are bought and sold quickly. The steady flow of Bitcoin across the market at any time allows investors to quickly enter or exit their existing positions. It is easy to understand. When a type of asset is trading in large numbers, you may face any difficulty in changing the price in any one direction.   The fiat currencies are also reacting in the same way. Like the US dollar which is famous for its liquidity and has good price value against other currencies. Bitcoin is a much smaller currency than these currencies. So the more a single event occurs, the greater the difference in its price.

Other Factors That Can Change Bitcoin’s Price

There are many factors that influence the Bitcoin market. If a major country fails to regulate any kind of currency it reduces its price in the case of digital currency we have seen in China is revealed, its price may drop. There are also various other circumstances that affect the value.

The production of Bitcoin is not controlled by any authority of person because it is produced by a special computerized system called a blockchain. These bitcoins are then sold with the ownership. Some of these owners keep a big quantity of Bitcoins in their e-wallets. So with the added advantage of liquidity. The price of bitcoins drops when traders sell them fastly in big quantities. This happened when a company called BearWhale overturned the market and sold its bitcoin reserves below the market price.

Conclusion

It is recommended that you should always keep in mind the things that we have mentioned above when developing your Bitcoin trading strategy. Bitcoin is a high-risk currency and sometimes market experts lose their money in this volatile market.

Photo by Alesia Kozik from Pexels

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