Bitcoin is one of the most discussed currency now after US dollar. Just like any other commodity , bitcoin is a digital assets has came to be affected by various factors.
I am going to briefly show how each one of these factors have led to increase or decrease of bitcoin price.These factors are:-
Demand
Supply
Competitors
Regulations
Media coverage
Cost of production
Fear and greed by investors
Demand and bitcoin price
Due to attention of retail and institutuonal investors of bitcoin, the thirsty for bitcoin has increased. Every great investor want to have a share of bitcoin. This increase in willingness to own bitcoin has caused its price to increase entirely. Currently many companies in USA own part of bitcoin. Increase in ETFs holding bitcoin has caused an increase in #BTC .
Bitcoin price and supply
This is the most determinant ever for bitcoin. The maximum bitcoin supply that will ever be is 21million bitcoins. The yearly production is decreased as time goes by the halving of bitcoin.This bitcoin halving is done after every four years. This halv8ng is where the number of coins given as rewards for successful mining are cut half way after every four years. The last halving was in April 19, 2024.
Bitcoin price and number of competitors
Bitcoin being the first cryptocurrency to be invented , it is still leading but it has gained competituon from other digital assets such as Ethereum,BNB, Solana, Tether, XRP and many more. In 2017 bitcoin was leading by market volume of 80% in cryptocurrency market but by now its total volume is 56 % that is , $1,371,115,842,878( $1.3 Trillion) against a market cap of $2. 34 Trillion .This competition has led to swings in price of bitcoin.
Bitcoin Price and Regulations
Bitcoin is decentralised commodity meaning it is not regulated by any government agency.This has caused it to be accepted by many investors due to the fact that its borderless and has freedom of sanctions or controls.The lack of regulations has played bith positive and negative on bitcoin.
Although bitcoin is not controlled by regulations, sometimes thes regulations affect bitcoin price.
Of late we have seen bitcoin behaving like tradtional commodities especially during this time of Iran- USA war.
Fear and greed by investors Vs bitcoin price
The excitment and fear by investors cause a change in bitcoin price.
During time of fear by investors the bitcoin price drops due to most traders selling bitcoin to avoid losses.
Greed period is when most trraders are rushing to buy more bitcoin. This excitment will cause an increase in price of bitcoin.
Media coverage and bitcoin price
Bitcoin is one the most highly published currency after the US dollar.
This publicity can be for bitcoin or against.Good news on bitcoin increases price while bad news on bitcoin will cause the orice to drop what is commonly known as dump.
Production cost and bitcoin price
Mining of bitcoin require high power of electricity and very expensive hardwares.
This two parameters will lead to high production cost which is transmittzd to the price of bitcoin. Hence high production cost increases price of bitcoin.
All the above factors make bitcoin a very important commodity as it influenced by most the human factors that also affect money. So bitcoin becomes a digital money by that virtue.