Bitcoin’s price has had a wild ride this year, and many investors are left scrambling to recalibrate their strategy. Some factors, such as the limited number of bitcoins in circulation, help to push up the value over time, other factors — such as government bans — can force a price crash.
Despite these patterns., the price of Bitcoin is notoriously volatile, so it’s difficult to predict exactly where it will go. However, there are several market forces that affect the price of Bitcoin and other cryptocurrencies.
Here’s what you need to know about them and how crypto asset management in the UK can help:
Supply and Demand
This is the simplest way to understand BTC price changes. If a lot of people want to buy BTC but there aren’t enough available for purchase, then the price goes up. The opposite happens if more people are selling their BTC than buying it — the price goes down.
Government regulations can also affect BTC pricing. If a government cracks down on cryptocurrency exchanges and mining companies, the BTC supply might decrease, causing prices to go up due to less supply and higher demand.
On the other hand, if governments legalize BTC within their countries and work with crypto companies to encourage adoption, this could increase both supply and demand for BTC and push its value upward in the process.
Bitcoin’s price reacts to the world news. During the coronavirus pandemic, for example, people turned to cryptocurrencies as a way to hedge against fiat currencies.
When one currency weakens, another currency or asset class can rise. Interestingly, there was no perfect correlation between Bitcoin and gold during the pandemic; both were up and down.
The price of Bitcoin rises when there’s media hype around it. There’s often a correlation between media coverage and price increases, as is usually the case with many assets.
When Twitter CEO Jack Dorsey revealed that he was selling his first tweet as an NFT and donating the proceeds to charity, it caused a stir in the crypto community — and sparked an uptick in prices.
Trends Like Celebrity NFTs and Crypto Games
NFTs exploded onto the art scene in 2021, generating millions in sales for digital asset management. As this trend has caught on with celebrities like Lindsay Lohan and Paris Hilton, it’s drawn more attention to cryptocurrency in general—and helped boost Bitcoin’s price.
Investment from Big Business and Individual Investors
When major companies like PayPal and Tesla announced that they will start accepting cryptocurrencies as payment methods or that they will contract with mining farms, Bitcoin’s price tends to rise.
At the same time, individual investors looking to diversify their portfolios can help fuel demand for this digital asset with the help of a cryptocurrency marketing agency.
News of Scams and Heists
The value of any asset can be significantly impacted by news events. Bitcoin is no different.
In recent years, bitcoin has been the victim of several major thefts and scams, including a 2016 hack that resulted in a loss of $65 million worth of bitcoins and the infamous Mt. Gox collapse in 2014 that cost investors an estimated $450 million.
These events have created doubt in the minds of some investors and, at times, even caused a significant decrease in bitcoin’s per-share price.
Become a Confident Crypto Investor Today
Next time you look at the current fluctuations in bitcoin prices, remember that cryptocurrency is an incredible financial asset — one that will stabilise as more and more investors want a piece of the action.
If you are looking to enter the cryptocurrency market as an investor, Key Coin Assets can help. We’ve been in business for over a decade, and we specialize in managing assets for clients who want to invest in cryptocurrency and build their wealth with it.