Bitcoin is the most widespread crypto and the most susceptible to various factors that can affect the price. But what are those factors actually? Well, this is no simple matter, and there are hundreds of things that can make micro changes to the price and influence the Bitcoin market.
However, there are some of the big ones that affect the Bitcoin price intensively. Let’s take a look.
Although it is supposed to be hacking-proof, the Bitcoin system is often a subject to various attacks. For example, the most famous attack happened on Mt. Gox’s exchange platform, which significantly changed the price of Bitcoin back in 2013.
Luckily, the attacks of this magnitude did not happen again, but several smaller-scale attacks definitely shook the price for a couple of times. There have been several recent occurrences though – take Coinrail, Nicehash, Bithumb, etc.
The Bitcoin Whales
The concept of whales is not new. In general, a whale is somebody who has a significant impact on the economy merely because they are rich. It is a bit more complicated than that, but the essence is the same with Bitcoin.
It means that there are approximately one hundred people who hold over 40% of all Bitcoins. It follows that whenever somebody makes a move such as a huge payment in Bitcoin, they affect its price and stability. Just like a whale affects smaller fish while moving.
Other cryptos, also known as altcoins, can sometimes affect the Bitcoin value. It is the procedure that usually goes another way since Bitcoin is the dominant one, but this way is not completely excluded either.
The altcoins and Bitcoin have a complicated relationship actually, and the future is always uncertain. It means that other cryptos may actually take the throne someday.
Cryptocurrencies are still widely unaccepted by the nations and they are yet to be considered and implemented. The first country that accepted Bitcoin as a currency was Japan. This fact alone immediately affected the price.
The whole acceptance thing is very uncertain, though. There are still no adequate laws which will address Bitcoin and there is still a lot of space to speculate about the possible implementations of crypto. One thing is certain – it has the technology to support its aspirations to become as widely accepted as fiat currencies.
Illegal Bitcoin-related Activities
Whenever there’s money, there are illegal activities. These can range from Ponzi and MLM schemes to paying ransom to remove ransomware from your computer. There are really thousands of ways possible to use Bitcoin illegally, and these are often factors that make its price go up or down.
Is it possible to remove the illegal activities? Well, it is in a way if the technology behind Bitcoin makes a great progress, but then the philosophy of anonymity behind Bitcoin will become somewhat futile. Nevertheless, it will still be a more reliable currency in comparison to fiat money.
The first time that Bitcoin skyrocketed, it was all the product of hype. Suddenly, people realized that it existed as a completely legitimate type of money, and everyone started talking about it. The more recognized it gets, the more people will start investing in Bitcoin and trading it.
However, this may not always be the positive thing that will add to its value. The collective behavior may just as well negatively affect the coin.
Fear of Missing Out (FOMO)
This behavior is present on the market as there are financiers who put more money into Bitcoin because they fear that they will miss out on the chance to make more money when the price of Bitcoin grows. This behavior is usually associated with newbies, and it is a factor that affects the price to a certain extent.
Perspective towards Bitcoin
There is an overall perspective or the sentiment of the public towards Bitcoin that determines how many people will actually use the cryptocurrency. For example, when the Mt. Gox attack happened, the stealing was not the only factor that affected the price. At that moment, many people simply stopped believing in the crypto, which automatically resulted in less attention to it.
The government constantly makes certain moves which may or may not be related to Bitcoin and other cryptocurrencies, and this may be one of the factors that affect the price not only of cryptos but also of fiat currencies. One of the notable examples is the infamous Brexit that has happened recently. When citizens of the UK voted to exit the EU, Bitcoin was heavily affected.
It goes without saying that whenever a significant change happens with fiat, this will naturally affect the cryptos as well. Let’s talk in dollars and let’s talk in Bitcoin as the two most popular representatives of each type of currency.
These share the special bond, and you can see that the alteration in the value of dollar will always make some difference in Bitcoin. That only tells us that Bitcoin is a crypto that is being used a lot and is on a good way to become fully accepted into the world economy.
To sum up, Bitcoin is still highly volatile and there are many factors that simply do not allow it to become more stable. As such, it still wakes a lot of doubt among the people who consider becoming potential investors.
It is difficult to predict the future of this crypto (and all the others, for that matter) due to the high number of these factors. However, it is definite that they are bound to become more stable in the future when more people start to use them for everyday purposes.