Bitcoin Rate — What Are The Key Factors?
By Digital Korsair on ALTCOIN MAGAZINE
Everyone engaged in the cryptocurrency market remembers well the first cryptocurrency astronomic rate growth at the end of 2017, when the asset price almost reached the peak value of $20k.
The declining trend during 2018 and the rapid dip in November 2018 also left some stains in memory. However, a lot of people, attracted by the simple desire to get incomes in cryptomarket fast, do not understand the idea behind such events. The cryptocurrency volatility is a factor we can’t ignore, and it’s accepted as a general matter. But, the unprecedented rate fluctuations create more tensions within the community of crypto holders, miners and digital assets adopters.
The Top Coin
In general, a large number of different factors affects the cryptocurrency rate, so, in order to achieve understanding, let’s go into realizing the Bitcoin nature — the very essence of the #1 cryptocurrency.
This kind of asset is entirely decentralized and has no governing bodies. With the whole capitalization asset threshold of 21 million units, it has the “dead end”, which means that no one can get more BTC’s overtime. The remaining coins are mined by miners by the processing of transaction blocks.
Digital currencies are still at its infancy. According to Coin Market Cap, the market capitalization of cryptocurrencies stands at $ 265 billion marks. The easy and straightforward example to realize how the coin value is calculated is this: if the market cap is $ 21 million, each coin will cost $1. And if the market would be $21 billion, 1 BTC cost — is $ 1,000 accordingly.
Step By Step
To understand why the Bitcoin rate is growing or declining, one needs to identify the following factors that directly affect the value of the asset.
1) The capitalization threshold. The Bitcoin can be easily compared with precious metals such as gold, silver, which are not afraid of inflation. Also, when we make an example to minerals, which resource is limited — and the closer the capitalization threshold, the more difficult the extraction of the currency itself;
2) Ongoing trade and exchange operations on specialized platforms. Since the Bitcoin is the ancestor of all digital currencies, its new forks also have to be performed with the BTCs, which leads to its inevitable growth;
3) The digital assets market, like all other markets, is the field of activity of traders whose main task is to make a profit, which is possible with price changes. Therefore, the more often the value of the cryptocurrency changes, no matter in which direction — the better.
3) The worldwide crypto community is growing — which increases the demand for the asset as a whole;
4) We all know that “The news is the king” — so the background also plays a huge role in shaping the Bitcoin rate. Positive news, such as the legalization of virtual currencies in first world countries, or updating the algorithms of the system play a positive role in global rate. An artificial hype involves the media and experts with the purpose to set the desired direction of the price for the profit of a specific group.
The ability to manage demand is not in doubt. Creating a stir by constantly stuffing information on this topic is a common phenomenon nowadays. One of such examples — is the BTCH hardfork, which made the headlines and influenced the prices heavily on the same day!
5) Pumps/dumps as a scheme of selling or buying a large amount of some cryptocurrency assets. The rate is also heavily influenced by the so-called “whales,” or the market players with the fattest wallets — their actions, planned or not, always have consequences in the form of “waves,” or the fluctuations. Those people are not numerous, but the effect is substantial since they have a huge number of coins in their holdings. Therefore, we consider market fluctuations to be a controlled process in which, consciously or not, all participants are involved.
Where are my Millions?
Summing up the market trends, we want you to realize one thing — the Bitcoin is a volatile asset, and if it’s the price is decreasing, certain events are underlying it. And of course, it’s suitable for someone — as two main rules drive the whole market: buy on lows and sell on highs. Every other factor, such as hopes, fears, and beliefs of the investors are no more than the sideline of trading effects.
To realize what future expects cryptocurrency market and the Bitcoin, one should carefully and continuously track and study the events happening on the cryptomarket and understand what impact they might create.