Bitcoin was made publicly available in the year 2009 as a digital currency. During the year 2010, its popularity started to rise steadily. In addition, a token previously cost a fraction of a dollar, and since its price increased to $0.08, it has increased in value by almost thousands of dollars – sometimes rising and falling by thousands of dollars. There are many reasons behind the history of this volatility in bitcoin. When you understand the factors that affect its market value, you will be able to easily decide whether to trade or invest in bitcoin.
Bitcoin demand and supply
When compared to other factors, demand and supply are the factors that play an important role in influencing the prices of commodities. Talking about the impact of the market value of bitcoin here, it mainly depends on how much people are paying and approximately how many coins are in circulation. On the other hand, if by design, the number of cryptocurrency coins is limited to around 21 million and the higher the circulating supply is to win around this limit, the higher the price is likely to climb.
However, it will be very difficult to predict what will happen to the prices when the coins reach the limit; There is no longer any profit to be gained from mining bitcoins. When the big financial players compete for proprietorship in a dwindling supply environment, the price of bitcoin can fluctuate more as a result of any of their actions.
bitcoin investor actions
Bitcoin is one such currency which is considered to be the most popular in cryptocurrency and due to this, its demand is increasing day by day. In addition, the supply is also becoming more limited. Bitcoin is held by wealthy investors for a longer period, and those with less wealth are prevented from receiving the risk.
Most of the exchanges around the world have limits on the amount that can be easily liquidated in a day to the extent of around $50,000. Investors who hold more than thousands of bitcoins will not be able to liquidate their assets in any way to avoid any huge losses. Furthermore, even if the bitcoin price remains around $50,000, even a large investor will be able to liquidate only one coin a day, no more than that. On the other hand, when a typical investor starts selling, the prices start to fall, and if anyone sells more than $50,000 in coins before that, there is a potential for a huge loss. can.
Bitcoin is in its infancy
It is a reasonably stable commodity, be it price, supply or demand. Similarly, if we talk about fiat currency, it has been around for a while – while there are many countries which have seen more fluctuations in exchange rates and at the same time it has been seen to be somewhat volatile. Apart from this, the value can also be estimated based on the countries issuing them and the economic conditions.
On the other hand, if we talk about bitcoin, it has only been around for a short time – even today it is in the price discovery stage. This means prices will remain volatile as investors, governments and users work through initial rising concerns until prices stabilise.
Is it safe to buy bitcoin or not?
If you are considering buying bitcoin, you can easily buy it on government-approved crypto exchanges. Also, if you utilise BTC to increase wealth or preserve capital, one thing you need to keep in mind is that its price remains highly volatile. There is no guarantee that any return will be received because of it; That’s why you should invest as much as you are willing to lose.
