Cryptocurrencies were introduced in the market in 2009 by Satoshi Nakamoto. Back in the day, people hardly knew about it however, since 2011, its popularity has surged. The bitcoins that were initially worth only a few dollars are now worth more than a hundred billion dollars. Numerous factors are responsible for influencing the price of digital currencies.
Bitcoin is a decentralised digital currency, which is famous all around the world. Since the nature of this currency is decentralized, its price is not fixed and it keeps fluctuating. The price of bitcoins and other similar digital currencies is not determined by any single organization, government, or group of people.
However, governments across the world are looking forward to developing new ways that would help them control the price of digital currencies because it is growing exponentially. The major motive behind it to raise tax revenue and also to protect the investors. If you are a bitcoin investor, go URL will help you earn better returns from the investments you have made. Also, predicting and understanding the factors that affect Bitcoin prices will help you better understand and predict potential digital currency rates.
Factors That Affect The Prices Of Bitcoins
Bitcoin Listing on the Top Exchanges:
The rates of digital currencies or bitcoins are affected when they are listed in any exchange markets or when they are delisted. If a particular currency is added to the exchange market then its interest heightens, and vice versa.
It means that when a currency gets added to the listing, its popularity increases, and so does its liquidity. That being said, a listing of a currency is determined as a positive event that further leads to an increase in the price.
On the contrary, delisting is a sign of a drop in its rates, and depicts that it is not popular anymore. When you start investing in the bitcoin market, you will notice that when a new coin is introduced in the market, it attracts numerous investors, which results in a rise in its price.
Demand and Supply:
It is one of the major factors that impact the price of almost everything in the market. Digital currencies are no exception. If the demand is higher and the supply is not adequate to fulfil the demand, its price will automatically increase, and vice versa. Unlike the traditional currencies available, the supply of bitcoins is limited. However, with time, it is expected that the condition will get better.
There are possibilities that the demand for the digital currency may outbid the number of bitcoins available. Moreover, the demand for a particular digital currency varies. This type of situation is again dependent on several factors.
Power of the News in Media:
Media is another great tool that can either help increase the price of digital currencies or decrease them unexpectedly. They are responsible for driving frequent mood changes of the investors. The way, in which every article for the cryptocurrencies available in the market is written, impacts the demand of these digital coins greatly. It means that optimistic news about the currency will improve their valuation whereas negative news will have adverse effects.
Additionally, the media can also choose to play a favourable role indirectly. They can give proper and crucial information about digital currencies to the masses, so that they get a clear understanding of what cryptocurrencies are, and also get knowledge of how it works. When people start understanding what digital currencies are and how they work, the popularity of these coins will increase.
Certain Rules and Regulations:
Some other critical factors that impact the price of cryptocurrencies and include several rules and restrictions imposed by the national authorities on digital currencies. If the rules imposed on digital currencies are very restrictive in nature or take a form of repression, the price of cryptocurrencies will ultimately fall. On the contrary, if the rules are friendly towards the crypto market, they will act as a catalyst for the entire market.
Financial Crisis:
The price of the cryptocurrency in a particular country is also dependent on the economic condition of that country. If the conventional financial system of a country begins to collapse, people will run to find some other assets to safeguard themselves. During such a situation, bitcoin will become a great form of capital security for people. That being said, the financial crisis has a strong connection with the cost of digital currencies.
As more and more people start entering the digital currency market, its capitalisation will get better too.
Future Analysis:
It is easily depicted that the future of digital currency is quite uncertain in the market. Even if the nature of cryptocurrencies is very uncertain, the trend of investing in bitcoins is most likely to spread more among investors. The digital currency industry is growing at a rapid pace, and the currencies are used widely as well. In such a scenario, no one can make accurate predictions related to the costs of cryptocurrencies in the future.
However, a strong indicator has concluded that the bitcoin market is not going to stop, and it will only grow shortly. This fact holds great significance in the whole Bitcoin market. With modifying trends, numerous possibilities have arisen related to bitcoins. Hence, it is yet another factor that influences the price of digital currencies.
Bitcoin Market Cap:
The scenario of the bitcoin market is not fixed, and it keeps changing very often. Amidst all, these market caps are another strong factor that determines the price of digital currencies. If the market cap is experiencing a higher trend, then it is a great chance for the investors to incur huge profits. On the contrary, when the market experiences a downward trend, the gains for the investors will get reduced too.
Conclusion
Numerous factors affect the price of bitcoins. We have already discussed a few, there are several others as well. If you are involved in making transactions or want to get involved in trading digital currencies, then you should know the factors responsible for price fluctuations, before you get started with the transactions. Being prepared will help you raise gains for a longer period.
