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5 Key Factors That Impact the Price of Bitcoin

by Altaf Shaikh
5 Key Factors That Impact the Price of Bitcoin

Bitcoin trading has become more and more popular in recent years. And while Bitcoin is still in a bull run, there are even more businesses and people that want to invest in BTC. If you’re also looking to become an investor, it’s is very important to know what are the key factors that determine the price of Bitcoin. Here we have picked the top five factors that impact the price of the cryptocurrency.

Supply and Demand

Bitcoin is a decentralized cryptocurrency that is not owned or controlled by a third-party, this means that for the most part, the supply and demand are the driving force behind the price of Bitcoin.

When the demand increases, it also drives the price of Bitcoin up, as the supply of BTC is restricted, and it increases at a slower rate than the demand. Basically, the interaction of the supply and demand on the market influences the price of Bitcoin. 

The supply is affected by the number of miners on the blockchain network and the level of difficulty of mining that is based on the computing power in the network. Therefore, as mining gets more competitive, it will take more time for new BTC to enter into circulation. Also, the entire supply of BTC was capped at 21 million by Satoshi Nakamoto. 

Bitcoin Halving

This event is a major factor that has an effect on the price of Bitcoin. The halving literally cuts in half the block reward the miners get after 210,000 blocks or four years. This event impacts the supply of BTC because the incentive for mining is decreasing every four years. More specifically, it decreased from 50 BTC in 2009 to 6.25 BTC in 2020. 

So, not only the reward is split in half, but also the rate at which new BTC are being discovered. Based on the previous data about the last three halvings, the price always spikes after the event. In fact, in 2020, there was again a price surge after the halving in May, and the price rose from $8,784 to $9,999.

This is the main reason why it is one of the most anticipated events in the community. But, keep in mind that it doesn’t directly influence the price of Bitcoin, but it affects the ratio of supply and demand.  

Online Exchange Platforms

If you visit different online exchange platforms, you’ll notice there’s a slight difference between the average prices of Bitcoin. Different online trading platforms set a somewhat different average price of Bitcoin.  

A great trading platform is Bitcoin Supersplit that relies on an automated algorithm, which means new investors can easily use the platform and get into trading. In order to open your account, you need to deposit as little as $250, and you can earn up to $1500. 

Otherwise, they explain in more detail everything you need to know about trading here in the learning center that consists of several trading guides and tutorials. This is why Bitcoin Supersplit is a great site for beginners.

Government Regulations

Regulations that make it easier for people to invest in BTC or accept payments in BTC also affect the price of Bitcoin. On the other hand, if the government puts restrictions in place regarding cryptocurrencies that hinder their growth, this also will impact the demand for BTC. Fortunately, there are a lot more governments and businesses that want to invest in BTC and other digital cryptocurrencies. That being said, there are more than 15,000 businesses all over the globe that accept BTC.

Competition

The popularity of other cryptocurrencies also can shift the demand for Bitcoin. There are over 2,000 cryptocurrencies right now, and in the future, it is possible that the number to increase. Some of the other popular cryptocurrencies are Ethereum, Monero, Libra, Litecoin, and others. It should be noted that many businesses like Amazon, Facebook, Walmart, JPMorgan Chase are looking to develop their own cryptocurrencies. 

But still, right now, Bitcoin has the largest market cap of $442 billion.  Furthermore, the popularity of BTC has undoubtedly also impacted the bullish cycle of the cryptocurrency in 2020. So, today there is an ever-increasing number of people that want to obtain BTC.

Final Thoughts

Ups and downs are present in every financial market, and of course, there are ups and downs in the crypto market. However, this is still a new currency that isn’t as widely used as other fiat currencies, so single events might have a strong impact on the price of Bitcoin.  This is why it’s important for investors to learn more about cryptocurrencies and keep up with the latest news and trends in this sphere in order to make the best decisions about their investments.

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