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Three Factors That Affect the Bitcoin Market Price

 

What is the best time to buy Bitcoin? There are many factors that affect the price of Bitcoin, including the scarcity of the currency, Media reports, and interest in using it as a store of value. Let’s examine some of these factors and determine the best time to buy Bitcoin. Then, use the information you gain to predict its future value. You may be surprised at how quickly the price of Bitcoin can change. The following are three factors to consider:

Demand for Bitcoin cryptocurrency

Cryptocurrency is a type of decentralized digital asset. Its creation was motivated by the need to facilitate online exchanges. Transactions, which take place through crypto exchanges, are recorded in a blockchain, a public database that tracks the history of every unit. This can help establish ownership. Cryptocurrencies can best be visualized as virtual tokens. They are programmable to record financial transactions and other valuable information.

This growth is being driven by three current narratives. First, people fear cash because of the Ebola virus. This has led to a decline in cash use, which can spread dangerously. Second, people are focusing more on digital payment channels to avoid the risk of theft or terrorism. These three narratives are causing increased demand for online resources. Bitcoin mining hardware and mining software are among the key players in this market. As the cryptocurrency market grows, more people will have access to the technology.
Supply of Bitcoin

Many users advocate the fixed supply of Bitcoin, likening it to the gold standard. However, others consider this limitation an impediment to the cryptocurrency’s potential as a universal currency. Bitcoin’s similarity with gold is that it is mined from a digital blockchain by special hardware, and it is completely weightless and almost costless to store and carry. However, it is important to note that the finite supply will increase as more consumers begin to use it.

The current circulating supply of Bitcoin is approximately 18.9 million BTC, which is almost 20% below the 21 million BTC hard cap. The limited supply of this digital currency is contributing to the increase in its price. Still, the crypto industry is in its infancy. Although one out of every ten Americans invest in cryptocurrency, only 55 percent do so in stocks. And the crypto industry is surprisingly difficult to understand. It is essential for individual investors to thoroughly understand the risks of investing in cryptocurrencies. To do that, investors should first determine their risk tolerance. The crypto market is not for people who are looking for guaranteed returns.

Media reports

Earlier this month, Canadian capital markets watchdogs put cryptocurrency companies on notice after they observed a wave of ‘problematic’ promotional activities. Coincidentally, the news article coincided with a -6% decrease in the Bitcoin market price. The recent downfall in Bitcoin’s price may have affected the company’s image, as institutional investors may see cryptocurrency as a risky investment. Therefore, the media reporting about Bitcoin’s price could have an impact on the company’s reputation.

The data collected revealed three dominant discourses: crime, financial governance, and economic market sentiment. Each of these topics had distinct characteristics that helped us categorize news media stories based on their content theme. We then assessed the content of each news story against its possible effect on Bitcoin’s price. In the end, we discovered that the most common topics related to Bitcoin are about security, regulation, and the economy. In addition to this, we identified a subset of news stories that concerned the Bitcoin market in a negative way.

Interest in Bitcoin as a store of value

There are many uses for Bitcoin, but its price is what attracts the most attention. People are always looking for ways to increase their wealth, and Bitcoin has proven to be an exceptional wealth-building tool. Over the past decade, it has achieved an annualized return of 230%, more than ten times the annualized return of the Nasdaq 100. While Bitcoin’s recent volatility is certainly concerning, there are also many advantages to investing in this digital currency.

While Bitcoin’s popularity has increased, it has also been plagued by hacking attacks, thefts, and other security issues. In 2014, hackers took down the largest Bitcoin exchange, Mt. Gox, causing the loss of more than 850,000 Bitcoins worth $17,000 each. A similar attack occurred on December 7, 2017, when hackers stole $70 million worth of Bitcoin. Unlike other currencies, Bitcoin owners cannot keep their coins in a bank to protect them from theft. Additionally, Bitcoin deposit amounts are not insured like deposits in a bank.

Volatility of Bitcoin market price

The volatility of the Bitcoin market price is the natural outcome of the currency’s price movement. It is not the fault of new investors or the Bitcoin network, which has no central authority. Rather, this volatility highlights the independence of the market. Moreover, the price of Bitcoin can more accurately reflect the opinions of investors. There are several reasons for this volatility. Let’s examine the main factors. In addition to its high volatility, Bitcoin has a limited supply of 21 million coins, which is a major contributing factor in the price fluctuations.

This phenomenon is not limited to the Bitcoin price. In addition to the lack of market fundamentals, it is also affected by headline-making news. This is what causes the price to surge in a short time, only to retract after a massive sell-out. Similarly, news about bitcoin prices can cause its price to fall in the same way. It is a common phenomenon in the cryptocurrency market, and the price of bitcoin is correlated with news stories about the cryptocurrency.