Bitcoin and cryptocurrencies have been the center of attention in recent times due to the disturbing global economic recession experienced this year. Bitcoin for beginners might sound a bit confusing on how it operates and exist in the digitized world, still, it has become quite a relevant economic force in the past years.
Its importance is evident from the fact that the crypto world and blockchain technology was on the agenda of the World Economic Forum January 2020. It was widely discussed how digitized economy can come into integration with the traditional financial systems. It is a complex transition process as blockchain networks do not allow any sort of moderation and transactions remain irreversible.
Bitcoin is holded and traded off using platforms like bitcoin prime and it presents ultimate convenience for its owners. They are making a fortune for themselves without coming in the notice of regulatory authorities and enjoy superior decentralized controls. Each of the digital asset owner gets to decide what factors he need to consider for buying and selling. Third parties have minimum influence over the blockchain networks and security remains uncompromised.
Well, things remain quite open for all of the stakeholders involved. Still, there are some key bitcoin price determinants that leads to pricing trends. This fluctuation in pricing helps to find profitable trading opportunities. Let’s discuss some of the bitcoin price determinants briefly:
Supply and Demand:
The traditional economic concept applies over this mode of economy too. As bitcoin is not monitored by any of the financial authorities, it is to be mined or existing cryptocurrencies are traded on regular basis.
If the overwhelming bitcoin supply is available in the markets, it would lead to the decrease in price and vice versa. You need to predict the supply and demand trends over time in order to buy profitable bitcoin trades for yourself.
The aspect of competing cryptocurrencies like Litecoin, Eth, and many others have a direct impact on the demand of bitcoin. With demand being affected, it would lead towards the effect on bitcoin pricing.
Investors now look towards diversifying portfolios within this domain too as the cryptocurrency markets also present different kinds of investment opportunities. They need to be aware of the pricing trends of maximum number of cryptocurrencies available in the exchanges.
Digital economy is still not welcomed openly by the financial regulatory authorities. Although it was rightly highlighted recently by the Supreme Court of India, while directing RBI to accommodate cryptocurrency firms, to consider cryptocurrencies as a commodity rather than a competing currency.
Many states now allow individuals to hold cryptocurrencies and trade them off at their own liking. These sort of regulatory factors is quite a motivating force for people to engage within this virtual economy. When the factors and circumstances revolving around cryptocurrencies are favorable and present low risk, the demand will increase certainly and lead the affect to its pricing.
These were some of the leading Bitcoin price determinants. It is quite important to understand how all this thing works as it might become a leading force in the near future. This will mean more power and control to the end users, so we all hope that things start to move towards digitization more rigorously as early as possible.