It’s no secret that the price of bitcoin changes day to day, sometimes minute to minute. It’s also not unheard of to see an extreme change in the price of bitcoin within just a few days or even hours. What causes this? Why is there so much volatility in the price of bitcoin? We can’t predict the future or anything like that, but we can list some things that affect the price of bitcoin, along with their impact on you and me as individuals who use it every day.
The number of places where you can buy and sell bitcoin continues to grow. The Winklevoss twins, Tyler and Cameron, have applied for a patent to launch their own exchange-traded fund based on bitcoin. If approved, it would be a significant step toward wider acceptance—and larger volumes of trading. There are also rumors that some existing financial institutions may start offering bitcoin services as well. You’ll have to wait and see if they follow through; in addition to regulatory issues, they may be worried about security risks or negative publicity in case something goes wrong with your holdings. In any case, make sure you understand what kind of protections your institution has in place before depositing money there.
Governments, Banks, and Regulators
The involvement or non-involvement of government, banks, and regulators can have a huge effect on bitcoin’s price. If government and banks want to crush bitcoin (which they sort of do), then they can create regulatory blocks that would make it more difficult for exchanges to operate. While we haven’t seen much in the way of negative news that would suggest an attack is on its way, there is always a chance things will change.
Retailers, Investors, Miners
These three groups are currently the biggest contributors to bitcoin’s price. Retailers can have a huge effect on bitcoin’s price for one obvious reason—they’re buying it. When people go to buy $100 worth of bitcoin and there isn’t enough supply, that pushes up its price. The same is true if there is more demand than supply. People who are interested in investing in cryptocurrency, as well as people who want to be paid in cryptocurrency, are pushing up demand too. They represent a bigger and bigger piece of bitcoin’s current value; according to Coinbase CEO Brian Armstrong, they were responsible for 100% percent of its value at one point last year.
Gam3lers and Speculators
It’s still somewhat difficult to buy bitcoins with your credit card, depending on your jurisdiction. However, bitcoin exchanges do tend to accept credit cards and debit cards for purchases. In addition, you can use peer-to-peer platforms such as LocalBitcoins to buy bitcoins from people in your community. Just be aware that even though these platforms function without a middleman, there may be fees when you buy or sell bitcoins as an individual (buyer beware).
You also have to consider what you are going to do with your digital currency once you purchase it—if you’re simply looking for investment opportunities, a digital wallet will work perfectly well. If you’re looking to actually spend your bitcoins, it’s probably best if you download one of many available mobile apps designed specifically for spending bitcoins (like Coinbase).
There are also some brick-and-mortar businesses like bars and restaurants that now accept bitcoin—you’ll just need to check each business individually to see if they accept cryptocurrency payments.
Although it has only been around since 2009, Bitcoin is one of those things that could change everything about how we live our lives; what we pay attention to; how we look at money; where we keep our money; etc.
Programmers, Developers, and Coders
The market cap of a bitcoin is driven primarily by the software developers, coders, and engineers who are constantly working to improve the quality of the core technology, whether it’s by tweaking the underlying code or incorporating new features. As bitcoin becomes more useful and widely adopted, there are several things that may affect the price, including developer activity, how easy it is to use, security concerns (especially surrounding hacks), how simple it is to buy and sell on exchanges like Coinbase. The development community also plays a huge role in making sure everyone has access to open-source code that powers blockchain technology around the world.
The price of bitcoin changes in response to developments within its economy, and especially if it is being manipulated by big players. Sometimes, speculators intentionally increase demand (or decrease supply) so that they can push prices higher (or lower). So, if you see that a ton of money has been poured into bitcoins over a short period, you might infer that there is an economic motive behind it. Let’s say a big holder starts selling his or her bitcoin holdings.
Who owns the most Bitcoin?
As with any cryptocurrency, the identity of Bitcoin’s owners is anonymous and could be anyone in the world. The currency’s overall market cap makes it worth billions, making it highly unlikely that most investors are just average citizens trying to make a buck or two. More likely, they are people in the technology or finance industries with some savvy—the same people who have been pouring money into blockchain startups and cryptocurrencies for years now.
Can Bitcoin crash to zero?
There’s an old Wall Street saying that there are only two things certain in life: death and taxes. One could certainly add a third to that list—Bitcoin price volatility. Although it is notoriously difficult to predict how much a bitcoin will be worth in six months or a year, these five factors have been shown to play a role in determining what affects bitcoin price over time.
Is Ethereum better than Bitcoin?
In recent years, bitcoin has attracted a lot of attention. However, it’s not alone—there are over 700 other cryptocurrencies on Earth. And some are more valuable than others. One cryptocurrency that has recently gained a lot of traction is Ethereum (ETH). So what does Ethereum have that bitcoin doesn’t? Why do so many people want to buy ETH instead of BTC? The answers might surprise you! Here is one reason why ETH is better than BTC right now. Is Etherum better than Bitcoin?:
Transaction Speed and Cost: If there’s one thing that can be said about bitcoin, it’s that transactions take time. They aren’t instant like they are with credit cards or PayPal and they cost money to process. For example, if you want to send $100 worth of BTC from your Coinbase account to another exchange where you can trade for ETH, you could pay up to $15 in transaction fees.
That would leave only $85 in your wallet once your transfer was complete – certainly not ideal if you were looking for an investment opportunity! Ethereum transactions take minutes and cost pennies on average. You can send $100 worth of ETH from one exchange directly into another without paying anything extra.