The Volatility of Bitcoin – LoveBelfast

Bitcoin! It was 2009 when Bitcoin was made publicly available by the mysterious figure Satoshi Nakamoto to provide better financial order. In 2010, the first ever digital currency began its journey to become the most popular cryptocurrency.

The first time BTC’s value increased, the jump was phenomenal. From trading at $ 0.0008 in early 2010, by the end of 2010, Bitcoin reached $ 0.83. From that day on, its price has continued to rise. We all remember that just several months ago, BTC hit nearly $ 70,000!

But then there are many ups and downs, and sometimes even Bitcoin can be squeezed by the bear market in cryptocurrencies and its stagnation.

There are many unforeseen factors and events, such as conflicts and health crises, that affect Bitcoin’s volatility. If you are looking to invest in Bitcoin, you need to know and understand them well, as they play a crucial role in how Bitcoin’s value fluctuates.

So, if you want to understand the factors behind Bitcoin’s volatility, read on.

The Fundamental Law of Economy

One of the main factors influencing Bitcoin’s volatility is, you guessed it, its supply and demand. Just like any other digital commodity or asset, Bitcoin’s price will largely depend on its supply and demand.

Usually, BTC’s value will be dictated by its circulation offer and its maximum bid. Bitcoin has a limited supply which is limited to 21 million coins. As Bitcoin approaches the limit of 21 million coins, its value could also increase significantly.

It may be too difficult to tell what will happen once the supply limit runs out, but one thing is for sure. Miners will no longer profit from Bitcoin mining. The decrease in supply of Bitcoin could leave trading at the mercy of huge investors competing for its ownership. So, if you don’t want to miss it, now may be the right time to join the industry. There are many platforms, including the immediate benefit, which can help you connect with a broker and start trading. This particular website has a reputation for its great customer support team, which could come in handy if you have a problem.

Investors’ decisions and actions

The scarcity of Bitcoin may also lead some long-term investors to decide to keep their bitcoins. The research reveals that in 2020, one-third of Bitcoin’s supply was in the hands of the top 10,0000 investors.

It is difficult to understand how many of these large investors would be willing to liquidate their Bitcoins in fiat currency and how this could affect the entire market. Usually, if investors decide to sell their Bitcoin holdings, other small investors can panic and prices can go in a decreasing direction. This is why there have been desperate moves by financial institutions to regulate cryptocurrency trading.

Bitcoin’s volatility is also driven by market sentiment and people’s differing perceptions of its use as a store of value or hedge against inflation. Many investors are adamant that Bitcoin is able to hold its value. Many investors also use Bitcoin as a hedge to prevent them from losing large amounts if inflation rates continue to rise, which we are currently seeing.

Cryptocurrency regulatory issues

Issues related to the regulation of Bitcoin and other cryptocurrencies also have an impact on the market, which is still much debated and studied by experts.

In fact, a big factor affecting prices is the role of government agencies. One example is the IRS view on cryptocurrencies and taxes. Additionally, many countries have banned cryptocurrencies, switching to their own central bank digital currency (CBDC).

Additionally, the views of industry moguls, key government players, and even influencers play a role in Bitcoin’s volatility and regulatory future.

Ultimately, many factors affect the cryptocurrency market and its volatility, which also makes it so attractive to traders. If you ever decide to invest in Bitcoin, take all necessary precautions – always do your research and strive to learn more about the exciting world of cryptocurrencies.

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