Demand and supply are the major things that determine the price of bitcoin. When demand for it grows, the price increases and it reduces when the demand declines. just like traditional currencies, the price of bitcoin indicates the amount that users are ready to pay based on the expected future value of the currency. Due to the fact that bitcoin is still growing compared to USD or euro, the price is still very unstable but is predicted to become stable as the market matures.
What Makes Bitcoin’s Price Increase?
- Limited supply
Bitcoin is capped at 21 million and there are over 16 million bitcoins currently in the market. It will take over 100 years to reach the cap of 21 million.
- Development of The Bitcoin Network
Improvements in various features of the bitcoin network such as security feature, usability, privacy feature will help influence the price of bitcoin positively. Addition of new features to the bitcoin network that will improve user experience will also play a positive role in the increase of bitcoin’s price.
- Advantageous Government Regulations
If there is support from the government to make use of this currency, its price will increase.
- Observation of the Public
The public’s observation plays a huge role in the demand of the currency as if they trust it, the demand for bitcoin and its price will increase. Adopting innovative business resolutions will also help in the demand for bitcoin.
What Makes Bitcoin’s Price to Fall?
- Technological Issues
Several problems with technology such as security and privacy issues can influence the price of bitcoin negatively.
- Failure of the ecosystem
If the ecosystem fails, it will affect the demand of bitcoin negatively which will, in turn, cause the price to fall.
- Hostile government regulations
If the regulation of the government is not favorable, the price of bitcoin is likely to fall.
- Negative Public Perception
If the public does not trust bitcoin, its demand and price will decrease drastically as the public observation plays a major role in bitcoin’s demand.
- Country Restrictions
if there are restrictions on bitcoin, its demand will decrease and its price will fall.