Bitcoin is know for its notorious volatility ,past 3-4 months has been a roller coaster ride for bitcoin.In 2017 price of bitcoin spiked from 1000 USD to just under 20,000 USD before dropping to below 7,200 USD this year.Do you why bitcoin price fluctuates so much?
Today we are going to explore different factors effecting the price of bitcoin.
What drives the price of bitcoin?
1.GOOD AND BAD PRESS-
Bitcoin price is very sensitive to news events . For example last year bitcoin soared to 20,000 USD ,a week a before launch of CME bitcoin futures and had a free fall in January 2018 when there were rumors on complete ban of cryptocurrency trading in South Korea.
2.SECURITY BREACHES-
Back in 2014 MT GOX which was the leading exchange trading bitcoin got hacked and all its funds were stolen.People lost their confidence on the exchange platform which lead to a massive sell out and price of bitcoin dropped from 32 USD per coin to mere pennies.
3.NEW INNOVATION AND DEVELOPMENTS-
The bitcoin community is speculating to implement protocols like SEGWIT and LIGHTENING network which bring changes to bitcoin’s blockchain to allow for faster transactions and low fees ,which will pave for mass adoption .This will lead to high demand for bitcoin thus increasing the prices.
4.WHALES MANIPULATE THE MARKET-
Most of the bitcoin in the world is owned by a tiny group of people. As of late 2017, about 95 percent of the cryptocurrency was owned by just over four percent of people with bitcoin, according to reports. That means that a single person could decide to release huge amounts of bitcoin into the market at any moment, completely upending its value.
5.AROUND THE CLOCK TRADING-
Unlike other types of investments, like stocks or gold, bitcoin trading never stops, either. There are no market hours. Instead, you get non-stop 24/7 trading, which means even more fluctuations in bitcoin’s value and less stability day-to-day.
Bitcoin wild price swings can be attributed to its youthful nature.Experts predict that mainstream adoption of bitcoin will stabilize the prices in the future.
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