Guest Post

What Makes Bitcoin Go Up and Down?

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Bitcoin is volatile, which means the value or the price of bitcoin fluctuates every second. Of course, people know that bitcoin fluctuates every second because there are millions of bitcoin users, but the question is what makes bitcoin go up and down? So in this article, we will talk about the factors behind bitcoin that makes bitcoin go up and up. So without wasting time, let’s understand the absolute truth of up and down.

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Why is Bitcoin Volatile?

Bitcoin is a popular digital cryptocurrency, and millions of people use bitcoin for different purposes. Some people use it for investing, some for trading, some for accepting business payments, some for earning, and some for online shopping. Bitcoin is volatile because it is decentralized.  The primary purpose of making this digital currency is to solve all the problems concerning fiat currency. Fiat currency is domestic currency and is controlled by the Central Bank and the Government of the country. There is no control over bitcoin, and the price of bitcoin depends upon the various factors of the market, and it is also challenging to understand the www.bitcoin-storm.app.

Demand and supply:

The biggest reason for the up and down in bitcoin depends upon bitcoin’s demand and supply. Yes, bitcoin can be produced by solving complex mathematical equations, and these equations are complicated to solve. Every miner cannot solve these equations, and it requires high computational power. There are 21 Million bitcoins in circulation, and the process of producing or circulating new bitcoin on the network is very seldom. With increasing the popularity of bitcoin, demand is also increasing, but bitcoin’s supply is limited to 21 million. It is the reason the price goes up and down.

You know the rule of economics when the demand will be high, and supply will be below, then the price will increase, and if the demand will be low and the price will be high, then the price will decrease. The price of bitcoin is entirely dependent on the market or users of bitcoin. Demand is dependent on the popularity of benefits it is providing. Demand will increase if it solves the major problems, and the price will also increase, and if it does not solve the problems of providing value to their users, then demand will be low, and people will sell their bitcoins and the price will start declining. Not only demand and supply is the only cause of bitcoin price fluctuations, but many other reasons also affect the Demand and Supply of bitcoin given below:

  • It depends on the benefits of bitcoin, which means if bitcoin is providing bitcoin to their users, then the demand will increase, and the price will also increase. On the other hand, if it is not changing the market, people will sell their bitcoins, and people will decrease.
  • Check if bitcoin is adding value to the life of people. Bitcoin is popular because it has created some value in the life of people, and we can say the biggest reason for the success of bitcoin is that it is a problem-solving product. It has solved many problems of an ordinary man in big companies.
  • There are a lot of businesses that use bitcoin as a payment method. They accept Bitcoin payments that are too excited for the new bitcoin users who want to buy products for bitcoin users. In simple words, when a person hears about online shopping through bitcoin, then the first step to do online shopping with bitcoin is to buy bitcoin from the network. When people start buying bitcoin, that means the demand for bitcoin is increasing, and it means the price of bitcoin is increasing. If no business accepts payments, it will be no use, and the price will decline.
  • The media plays an essential role in price fluctuations. Everyone has internet access, and customers’ buying and selling decisions are only dependent on the media. Media influences people to buy bitcoin and to sell bitcoins by horrible or good news. For example, if there is a headline like this “In next five years, the price of bitcoin will increase up to $1,00,000,” and it is just a prediction, but people will start buying more and more bitcoins, and the price of the bitcoin will increase suddenly, and if there will be bad news, then the price will start declining. 

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Disclaimer : The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of Coinpedia. Every investment and trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.

Coinpedia

Crypto Journalist and Editor of guest articles in CoinPedia. I am also handling Outreach & Partnerships Manager. Contact me: [email protected]

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