Price deflections always drive Bitcoin investment. There are several contributing factors for the same. The frequent price changes of Bitcoin have been one of the key reasons that have drifted many people away from investing in Physical Gold. However, staying updated with the market trends can help financial investorsmake the right choice in terms of crypto investment. The focus of this blog is to highlight what are the key factors that may impact the pricing of Bitcoin.
Important Factors That Determine Market Value of Bitcoins
- The demand and supply- this thumb rule of economics also work in the crypto trading world. The parameter of demand and supply has an impact on the pricing of any asset, and the same is applicable in the case of Bitcoin or alternate cryptocurrencies.
A major portion of Bitcoin is held in the form of savings by many big names in the industry. You will be surprised to know that tech-giant companies like Tesla have spent millions of rupees on purchasing bitcoins. Since this cryptocurrency is available only in limited quantity in the market, it has contributed to a rise in the price. Alia cryptocurrency, which is not so much in demand, will witness limiting prices.
2. Updates of rules and regulations- another contributing factor to the rise in the pricing of Bitcoin is the new rules and regulations that are coming into the picture. Countries like the USA, Canada, India and others have come up with new laws that will regulate the crypto market. Many countries have imposed a tax on cryptocurrency transactions. India is the latest example of this.
Rules like the Securities and Exchange Commission (SEC) consider cryptocurrencies as security, and the Commodity Futures Trading Commission (CFTC) puts them under the tab of the commodity. If these regulations become too stringent, there will be a fall in the value of cryptocurrency; conversely, if there are rules that are not so repressive, that will catalyze the growth of cryptocurrency. Hence regulations by the government also have an impact on the value and pricing of Bitcoin.
- Media and news– another factor that impacts the pricing and value of Bitcoin and another cryptocurrency is the media and news. Even the slightest low rumor has the capacity to drastically impact the pricing and value of cryptocurrencies. A high created in the media can draw people towards investing in crypto trading. Similarly, it also leads to the hype in investment in a particular cryptocurrency.
Hence it is always advisable that one must first understand how the cryptocurrency market operates its related different factors. It is also advised not toconsider makingan investment due to the temporary spike of hype in the cryptocurrencymarket. Positive media coverage will lead to a rise in the pricing of Bitcoin, while negative media coverage will impact its pricing negatively.
4. Limitation of Number incryptocurrencies– When we were in 2009, Bitcoin had little or no competition at all, but over the years, as new currencies started invading the market, they stood as a positive threat and a competition to Bitcoin.
With the growing applicability and use cases of alternative cryptocurrencies like it Ethereum, it became a competition to Bitcoin. Hence, the value of Bitcoin may get impacted because of this. Similarly, the surge of stable coins, which is a great alternative for those who are willing to make a safe investment in the trading world, pauses to be a threat or a competition to Bitcoin.
While these may be contributing factors to impact the prices of Bitcoin or other cryptocurrencies, the fact that remains the same is that investment in cryptocurrency will increase in the times to come. The surge in the number of crypto trading platforms like the Bitcoin Era is also proof that people have a growing interest in making cryptocurrency a part of their investment portfolio.
So, these weresome of the key factors that impact the pricing of Bitcoin and other cryptocurrencies. Make sure that before you start making an investment, you must assess all the important factors and also take into account your risk appetite before putting in the money in the trading world.