Various Factors That Determine Bitcoin’s Price

Bitcoin, one of the most popular digital currencies, is not backed by governments or banks or recognized as the legal currency. But, private parties can make use of Bitcoin for their transactions in case agreed on, and it’s purchased & traded by investors on exchanges. Also, investors can purchase BTC through the cryptocurrency exchanges. You need to note that legality of the bitcoin price differs by country, with a few countries placing a complete ban on its use.

Bitcoin is the most volatile investment when looking at the basis of its currency’s price. When this currency was launched in the year 2009, it did not have any official price as it wasn’t sold. But, when its first exchanges started to appear, the price developed.

What Determines the Bitcoin’s Price?

Different from investing in the traditional currencies, BTC isn’t issued by the central bank and backed by any government authorities; thus, monetary policy, economic growth and inflation rates that generally influence the currency value don’t apply when it comes to bitcoin. On the other hand, its prices can be influenced by the given factors:

Supply of bitcoin & market’s demand

  • Rewards issued to the miners to verify the transactions to blockchain
  • Cost of producing BTC through mining process
  • Exchanges that it trades over
  • Number of other cryptocurrencies
  • Internal governance
  • Regulations governing the sale

Regulations related to bitcoin

When looking at the different factors affecting the price of a Bitcoin, one factor will be its regulations. In an online trading world, the great experience of accelerations can be seen. With such record, it has actually made an important thing for the regulatory bodies to look at the Bitcoin industry. Even Governments have become quite active to keep eye over various activities that involve money laundering or various other things that may hold the reference with BTC. In many countries, the development of Bitcoin isn’t holding any kind of restrictions. Thus, some users consider bitcoin as legal & other neutral.

Final Words

Before you engage in any digital currency transactions, investors should consider above factors in mind. Knowing these aspects before you enter the cryptocurrency market can help you to improve your income over a period of time. There might be various other factors that can affect the bitcoins price, like manipulations by the major players. Ones mentioned above are highly noticeable ones.