Bitcoin is a currency whose price fluctuates unpredictably all the time. However, to date, no one has been able to know what is the reason for this. However, given the high volatility in the value of bitcoin, it can be said that there are many reasons for its history. On the other hand, if you understand the factors affecting its market value, then you can easily be able to decide whether it will be right to invest in it or use it for trading or its development. If you are interested in trading Bitcoin, visit the official website of Quantum Code.
Today in this blog we will discuss three factors that can affect its market value which can help you to know what can be best for you.
1: Volatility due to high demand-supply imbalance
Worldwide, bitcoin is one currency that has emerged as the number one cryptocurrency. Since it was also the first on the block, people are more attracted to it than other altcoins. At the same time, during the year 2017, this number kept increasing. So, if you also own BTC, there is a commodity or asset that has attracted a lot of demand, and this demand and bitcoin price Canada has been growing rapidly over the past few years.
Furthermore, everything has a price attached to it based on market forces: where there is demand on the one hand, and supply on the other. Although the demand for BTC has skyrocketed and could theoretically be considered limitless, the supply of BTC is limited, with only 21 million that can be mined at any given time. However, BTC mining is expensive and energy-intensive, so most people will end up getting BTC from exchanges.
This possibility refers to the following:
- Currently, demand far exceeds the available supply of BTC.
- There are already informal markets outside of exchanges for buying and selling BTC.
- Around the world, there has been a significant rise in imperfect markets due to the growing disparity between supply and demand, where prices vary widely between different exchanges around the world.
2: Decentralization means no price controls
In the world of fiat currency, there is a limit to the rate of change of each currency price movement as there are many points at which intervention can be made. On the other hand, a central bank may decide to buy or sell a currency in large quantities. Which creates a possibility that no other institution can match to achieve price stability. However, with BTC, such controls do not exist. Its prices can see an increase anytime and can also fall in a single moment.
3: Publicity and News
The demand for any asset depends on the buyer and seller that they are towards that asset. Typically, human perception is governed by information. That is why, in war, the opposing forces use the power of propaganda as an instrument of war. Typically, such information is referred to in financial markets as market news. On the other hand, fortunately, or unfortunately, no asset has appeared to be more sensitive to the effects of news than BTC. In fact, during the year 2014, when the world’s largest BTC exchange with almost 95% market share was hacked by Mt. Gox, the exchange went bankrupt. Since that event, a lot of bad news has spread, which rocked the BTC price.
Bitcoin Volatility: Symptoms
The above characteristics are considered important for BTC and other cryptos. This could be the result of massive buying and selling in response to the news. Apart from this, many other factors may or may not help in maintaining the economy of BTC and regulation of crypto. However, the person who forecasts the BTC. price chart and also has the authority to influence the decisions of other potential investors with more purchasing power. As there are many signals by which news and other information are conveyed online, they play an important role in triggering the volatility of BTC.
