What Makes the BTC to USD Price Swing?

Known as the first money that isn’t controlled by any individual or federal body, Bitcoin is a decentralized cryptocurrency grabbing attention of many investors over the years. One might assume that the lack of centralized governance translates into disorder when using Bitcoin. However, the truth is that the technology behind the digital currency popularly known as blockchain is secure and very accurate. It tracks all transactions made through the Bitcoin network using data batches known as blocks, which interlink using cryptographic validation.

One vital aspect to note about Bitcoin is that it is very volatile. The fact that Bitcoin is the first digital currency makes it more popular than other coins and almost everyone wants to get their hands on it. This high demand causes its price to rise and fall irregularly by the minute. Let’s have a closer look at other factors that have both positive and negative effects on the BTC to USD value:

Demand and Supply

Like traditional means of payment, the price of Bitcoin is greatly influenced by demand and supply. Bitcoin has a policy that insists the total amount of the digital currency will never go beyond twenty one million. This implies that the supply of Bitcoin is considerably lower than the demand because more and more people want to invest in the digital currency. This supply and demand deficit has increased the price of Bitcoin.

Additionally, there is this misinformed idea that Bitcoin offers a direct entry to wealth. Many naïve investors are looking to become rich instantly, making the price of Bitcoin swing.

Protocol Improvements

Technology is constantly changing, and slight technology advancement greatly impacts the pricing of Bitcoin since it eases the activities associated with Bitcoin transactions. For instance, the integration of digital currencies by key Fintech organizations like Blockstream can create awareness and increase the price of Bitcoin. Such events are expected to add value to Bitcoin and the technology behind it.

Widespread Usage

Over the last few years, the popularity of Bitcoin has tremendously increased. Regardless of the many challenges, renowned companies increasingly allow payments using BTC. This extensive tolerance, as well as usage, has also contributed to the valuation of Bitcoin. The growing number of prominent companies accepting digital currencies is expected to continue impacting the price of Bitcoin.

Media Influence

The media is considered very important when it comes to swaying the pricing of digital currencies. The media can hype Bitcoin, leading to exaggerated prices. Similarly, detrimental news by both social and mainstream media can result in a significant price drop. For instance, news drawing attention to hacks on BTC wallets may cause instability to Bitcoin holders, leading to reduced prices. The valuation of Bitcoin also goes down when the media conveys dismissive news about government regulations.

Announcements from popular social media sites are just as influential in shaping the price of Bitcoin. They may create awareness and prevent their clients or audience from using digital currencies, thus leading to price decreases. This is what happened when Facebook, Google, and Twitter decided on banning crypto ads.

State Intervention

Most governments worldwide are yet to regulate Bitcoin but are constantly looking for ways to impose restrictions. These attempts by national authorities significantly influence Bitcoin’s price.  At the moment, regulators are still trying to establish whether Bitcoin is a currency or an asset. However, countries like the USA, UK, Japan, and Canada have already taken a step forward and now officially recognize the digital currency, though in slightly different terms.

In Japan, the resolution about Bitcoin being used as a medium of exchange to pay for goods and services was passed last year (2017) in April. Consequently, private corporations and entrepreneurs began implementing the decentralized technology of Bitcoin in all spheres. Currently, there are numerous BTC-accepting businesses in Japan, and this has incited a rapid increase in the Bitcoin price as well.

Presently, the positioning of Bitcoin carries more weight than ever before. Since the governments continue looking for ways to regulate Bitcoin, its price is expected to experience new swings in 2018.

Institutional Money

CME Group added Bitcoin to its futures trading platform in December 2017, and this news influenced the coin’s price almost instantly. This means that the more institutional money will go into Bitcoin, the heavier will be the effect on its value. Many capital investors don’t have time to make out how to keep their private keys secure and use Bitcoin wallets. This is where the institutions like CME Group come in, to make things easy for such investors. With alike groups entering the market, more high capital investors will turn to Bitcoin as their most preferred digital currency, and this will drive the price up.

The Mindset of BTC Holders

The mindset of Bitcoin holders directly affects pricing. Although the market is flooded with many other digital currencies today, Bitcoin holders have a lot of confidence in the coin. Besides increasing the price of BTC, this level of trust has made the digital currency stand out and resulted in it becoming the most sought-after cryptocurrency.

The fact that Bitcoin enjoys the trust of the community doesn’t necessarily make it the most valuable crypto. It is imperative for traders to pay extra attention to discussions in cryptocurrency communities and bear in mind the volatile nature of Bitcoin.

Speculation

Early cryptocurrency investors are now incredibly rich, and this has driven more people to invest in digital currencies. Early investors made up to 700 percent profit in about 11 months. The price of Bitcoin may go up because of purchasing pressure from people who’ve just heard about it for the first time. Since more people are seeking a fortune in digital currencies, the BTC price is likely to reach new highs.

Conclusion

Factors that influence the price of BTC are quite widespread. Learning these factors doesn’t imply that Bitcoin’s price will pursue a foreseeable order. Nonetheless, understanding them can equip you with pertinent information necessary for making vital decisions in the field of digital currencies.

Author: Yash Hirani

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