Bitcoin Price, Explained


There are a number of factors that impact Bitcoin price over the course of time.

Market demand and supply – This factor is major. Nowadays, Bitcoin does not have any physical equivalent in the real world, so BTC are sold on exchanges. The main principle of economics says that if people buy a currency, its price rises and if people sell the currency, its price falls. Bitcoin is no exception. In the fall of 2013, the price went up by 10 times as a result of Chinese demand.

Total amount of Bitcoins and Bitcoin holders – The total amount of Bitcoins is 21 mln, but they are produced with time.


Currently, there are about 16 mln BTC and more than 14 mln people have wallets with BTC. This number is growing rapidly and since the number of Bitcoins is fixed, the price will continue to rise.

News in mass media – There’s always a human factor involved – i.e. the way people can react to news. For instance, remember the 25 percent price fall after Ross Ulbricht’s arrest or the new price record in anticipation of the Winklevoss’ ETF hearing.

Technical issues – Bitcoin has an open source code, so everyone can examine it. New updates for fixing some bugs and weak points in code can give an impetus for price growth. Meanwhile, successful account hacks or server attacks can bring down the exchange rate. In August 2016, some hackers discovered a security problem in Bitfinex and the price subsequently fell.

Political and economic events worldwide – In the age of globalization, decisions in just one country can have an influence on the entire world – i.e. accepting Bitcoin as a means of payment in Japan.

High volatility – Volatility is the degree of trading price variation over time. Volatility refers to the amount of uncertainty or risk in a security’s value. Higher volatility means that a security’s value can potentially be spread out over a larger range of values. In other words, the price of the security can change dramatically over a short time period in either direction. The volatility of Bitcoin is about 10 percent right now, but it is going down.

Source: Cointelegraph