One of the most common phrases we hear when we talk about cryptocurrencies is that Bitcoin is very volatile, and we probably understand what’s happening, but rarely who think about the reasons why it’s like that. We all remember the times when it was worth only a few dollars, but the hype around it was pretty big, and a lot of people decided to invest some money in it. As things were going by, there were significant ups, compared to the value of the fiat currencies, which is mostly fixed and rarely corrected. even a few days ago, it was more than $63,000 for one BTC, and after a week, it was around $49,000, which is a huge drop in just 10 days. Surely, it’s rising again and today’s worth is between $54,000 and $55,000 per one Bitcoin. So, this is a nice example of what volatility means.
We can even compare these ups and downs to a carousel or roller-coaster because no one can ever predict what will happen in an hour or two, or tomorrow. The price also demands on the volume of demands through investment and trading websites like bitcoinstorm.io, which are using advanced tools and technologies to provide the best possible options for profit to the user.
Bitcoin’s price is determined by a lot of factors we can’t even imagine can be related. For example, the current situation in the world can largely change the price. We all remember the times in 2020, at the early stages of the COVID-19 pandemic, when the price was less than $6,000 at some point, but now we see it can be ten times higher as the things are getting nicer and better. It highly depends on the trading too, because of the:
1. Amount and quality of the trading data
The trading websites measure how much you invest in means of fiat money, or even other cryptocurrencies to get Bitcoins. When a large amount of money circulates through the network, it’s expected that the prices will rise, as the demand is going up. It’s the same as the products in the store. You probably remember when there was a lack of protective masks at the beginning of the pandemic. Their amount was limited and the manufacturers also raised the prices because the fabrics were more expensive, due to the huge demand.
That made them difficult to find, and expensive to buy, and the people found alternative ways to wear masks anyway. After a short time, the result was affordable masks with nice quality, that everyone can buy and have a few of them, as needed. It’s similar to Bitcoins. When people are getting more interested than usual, the demand is high, but the BTC supply is pretty limited on the blockchain, and the price is going up, so it can be available to those who really can afford it, and appreciate its worth.
2. BTC’s price index
The price index is showing us how things are going right now, and how many coins are transferred over time. Usually, it’s compared to fiat currencies, mostly the American dollar. Every day, there is a correction of the price, and the index is showing us the average fluctuation over some period. It won’t show us anything that will be helpful to predict the trends, but it’s always good to know how things can change in a minute.
3. The news
Maybe you saw that, but there was a huge price rise when Elon Musk announced he will be using this cryptocurrency in his company, and let the people pay with them in order to get a new Tesla. But, the beginning of the pandemic wasn’t that good for the BTC, and all the cryptocurrencies in general, since their price was pretty low until the global economy was somehow recovered. There were examples in the past when the price was directly tied to some bankruptcies or drug dealing, but the investors are those who kept the blockchain alive and promoted it to today’s levels.
4. BTC’s future is uncertain
As you know, the amount of Bitcoins available is limited, and there are 21 million of them, and according to some sources, as for now, there are around 2.3 million left to be mined. All the other amounts are traded, spent, and owned by the investors and traders. That means, at some point, there should be inflation, which will lead to halving, so it can stabilize the market. The blockchain is also upgraded regularly because getting Bitcoins as a reward for mining can become too easy. Anyway, knowing the fact that the number is limited, we can see how at some point there will be no coins left to mine. If there is a re-supply, the price will anyway go down. BTC’s value swings all the time, and no one can be sure how a particular event can affect it.
5. The adoption
One of the most underestimated reasons that affect the BTC rates is the adoption. Right now, it’s still taboo in so many countries all around the world, including China, even though there are based a lot of mining centers. Surely, we all fight for cryptocurrencies to be accepted as a payment method everywhere, but we must be aware that if they become commercial, they will be equal to fiat money, and there is no reason and purpose for the crypto market to existing.
According to these things we mentioned in this article, we can conclude that in many parts of the world cryptocurrencies are forbidden, and the authorities have strong reasons to do that. Every economy is different, and not everyone is ready to embrace the concept of crypto money. There will be ups and downs in the future too, but the predictions for the rest of 2021 are pretty bright, so we can only hope that those who invested, will make a profit from it.
It’s pretty obvious that this market will still be volatile in the future, because what’s the point of Bitcoin being stable? There is no excitement in that.