The history of cryptocurrencies created by an anonymous programmer or group of programmers under Satoshi Nakamoto can be traced to the 1980s when cyber currencies were called.
These coins started gaining popularity in 2008. Bitcoin was publicly available in 2009 and rose to popularity around 2010 when the price for a token rose from fractions of a dollar to 10 cents. In its time in our minds, Bitcoin has risen and fallen more times than most currencies have.
Several factors explain the volatility in the price history of cryptocurrencies. A good understanding of the factors influencing its market price can help decide whether to trade it, invest it or continue observing its developments. For a better insight on the happenings around cryptocurrencies, you can rely on best bitcoin robot UK. Best way to give yourself a headstart.
Below are key factors that influence the cryptocurrency market.
Cryptocurrency Supply and Demand
Like most commodities, investments assets, or other products, Cryptocurrencies’ price is greatly influenced by supply and demand more than any other factor. The cryptocurrency market is limited to 21 million coins; therefore, the market value is primarily affected by the volume of coins are in circulation and the number of people willing to pay. By implication, the closer the circulating supply gets to this market limit, the higher the prices are likely to climb.
The demand and supply make it difficult to predict what will happen to prices when the limit is reached; mining Bitcoin and other cryptocurrencies will no longer be profitable.
News about Cryptocurrencies
News and media outlets need content for their readers and viewers. Therefore, they often present information and predictions about cryptocurrencies from “experts” primarily based on opinions and not verified evidence.
Usually, there is an opinion from someone heavily invested in Bitcoin predicting that the currency will soon be worth hundreds of thousands. Some others excite newly invented cryptocurrencies to take away market share from Bitcoin. However, most of this media publicity and attention influence Bitcoin’s price to benefit the people who hold large coins.
Cryptocurrency Investor Actions
The action of big financial players competing for ownership makes the price fluctuate in response to any actions they take. For example, Bitcoin, the most popular cryptocurrency, increases in demand partly because supply is becoming more limited. Wealthier investors hold their Bitcoins in the long-term, preventing those with fewer assets from gaining exposure.
Bitcoin Regulation
Rumours about regulations tend to impact Bitcoin’s price in the short term. However, the relevance of this impact is often analysed and debated.
The view of the Government agency on cryptocurrency can also affect Bitcoin’s price.
For example, China’s government and her central bank announced in 2021 that all cryptocurrency transactions and facilitation were illegal.
Bitcoin mining was brought down following a meeting of the State Council Financial Stability and Development Committee in May, and this resulted in a massive shutdown of cryptocurrency mining farms in the country.
Rumours of actions to end mining in the country had caused prices to drop in the past—but following the release of the report of the committee meeting in May, the cost of Bitcoin’s dropped through August 2021 to about $29,700 miners scrambled to relocate.
Conclusion
Understanding the core principle of supply and demand behind the value of cryptocurrencies and all the other factors that influence them can help you make better cryptocurrency investment decisions.