Bitcoin price depends on

All of these reasons have been fundamental drivers for the price increase in cryptocurrencies. Supply and Demand is a big factor that determines the value of anything that can be traded, including all digital currencies in the market. For example, if more people are trying to buy bitcoins, while others are willing to sell them, the price will go up and vice versa.

And since the supply of many cryptocurrencies is limited, the increased popularity has been driving up prices. However, if a coin faces scandals like serious hacking attacks, or a new coin becomes commonly known as a scam, then the demand for it can go down fast - very fast. As a result, a domino effect can occur: The price of a cryptocurrency could then decline even faster, as many traders and miners want to realize the profits that they have made already.

Such events can also be felt beyond just one single cryptocurrency: for example, a decline of the Bitcoin price has led many times to a correction of the whole market for cryptocurrencies. Mass Adoption If a currency gains mass adoption, its value can shoot through the roof. This is because the total number of most cryptocurrencies are limited, and an increase in demand leads to a direct increase in price.

But which factors are still needed for cryptocurrencies to become truly adopted by the masses? One is the applicability of cryptocurrencies in real-world situations, i. If a cryptocurrency has a use case in everyday life like today's fiat currencies, it will be in a very good position to possibly play an important role in the future. Inflation of fiat currencies If the price of a fiat currency falls, then the price of Bitcoin would go up with respect to that currency.

This is because you will be able to get more of that currency with your Bitcoins. This phenomenon can be seen today, since the FED, the ECB and other central banks have been printing more and more money and keeping interest rates artificially low. Figure 1: Sketch of the differences in the price development of a cryptocurrency here Bitcoins and the US Dollar Production Cost The direct costs and opportunity costs of producing a coin are also factors which determine the value of a cryptocurrency.

Bitcoin, for example, has a high cost of production. The resources and energy that have been put into the mining of bitcoin can be seen as a reason why the bitcoin has value. In addition to this, there are also significant energy costs that are necessary for these systems to operate. Even though it may seem that the energy used for the creation of new Bitcoins is wasteful, it is still the only way to provide safety for the users - as mining is the reason why governments can't shut down the Bitcoin blockchain easily.

But there are discussions among programmers on how to make the process more efficient. Regulation The chance for regulation by governments is very high once the cryptocurrency has gone mainstream. You should also bear in mind that these regulations could lead digital money to become more centralized. This would have a big impact on the price of a cryptocurrency.

Critics say that transactions will be reduced and controlled because of regulations and the lack of security governments might see in cryptocurrency. Some institutions might even ban them as such attempts in Russia and China have shown. Conclusion The value of a cryptocurrency can change very fast, but with time one can see that the volume of transaction has gone up while the volatility has kept dropping.

It remains to be seen if this trend will continue. The chance of a significant correction in price has to be kept in mind. Since , a year after bitcoin gained monetary value, the crypto poster child has fallen victim to its own inflated prices. The way a coin is developed, and for what purpose, has a massive bearing on its value.

Much like fiat currencies, the price of cryptocurrencies is heavily swayed by supply and demand. What is the calibre of the founding team? This is why it acts as an effective store of value. Not all cryptocurrencies have a cap. However, a cap is not the only way to hedge against inflation. Ethererum, for example, has a set number of monetary policies, including a fixed supply and issuance schedule, to keep its value constant.

As long as demand outweighs supply, its price will keep going up.

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Source: Santiment Additionally, Spanish telecom giant Telefonica is all set to embrace Bitcoin payments. Microstrategy banks on lightning networks and seeks software engineers for its lightning network-based solutions. Moreover, the supply crunch would grow more evident, with the approaching halving event. Bitcoin Price Prediction For If Bitcoin manages to diversify and empower its liquidity over the next three years. It holds the possibility to attract more investors, which would result in global recognition.

That said, the chances of investments fueled by FOMO would be on the higher side. It is indeed a very good time to be alive. Over a decade after introducing the cryptocurrency, tens of thousands of other coins have followed and have remained globally circulated.

There is no better way to explain technological advancement than to point to digital currencies. This cryptocurrency was created to provide a more efficient way to use Bitcoin. While the former is preferred for spending, the latter can be used for investments. You can sell or buy Bitcoin Cash now as it is accepted by many traders globally.

As more platforms accept digital currencies and integrate digital payments, the value of Bitcoin Cash will continue to increase. The Bitcoin price is not left out in this volatility. For over a decade, cryptocurrency traders have been encouraging other internet users to invest in Bitcoin. Like the hard currency, it is not a surprise to see the value of a currency rise and drop from time to time. However, Bitcoin investors have also had to watch the Bitcoin price reach an all-time low and high.

Despite being the oldest cryptocurrency, Bitcoin transactions took a very long time to complete. The Bitcoin network was divided into two forks — Bitcoin and Bitcoin Cash to resolve the speed problem. People who wanted to use Bitcoin for fast transactions could buy Bitcoin Cash, while Bitcoin was left for those concerned about investments. To challenge the rise of Bitcoin, economists introduced new digital assets, and this crippled the price of Bitcoin.

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