Bitcoin (BTC): The trend of crypto-currencies is increasing every day. There are so many rises and falls of this currency that are witnessed to date. Of all, bitcoin is said to be the number one crypto-currencies that has been trading below $7000 if you compare it with its peak price which was more than $19000 out of which there was a loss of two-thirds of its total value from the peak. Many other crypto-currencies have witnessed the same steep fall in their value over the last quarter since the investors are pulling themselves out from the market. If you have a focus on the currency crash, well it follows a year of some impeccable returns when crypto-currencies save the value increasing the multifold because of the expectations of the investors over their prospects.
The price volatility of bitcoin is rapidly taken place. Even those economists who are quite experienced stated that there is a correlation with any other commodity, currency, and even the value store which is traded in the global market.
What Hampers Bitcoin’s Price?
Multiple traders are quite focused on the exchange prices that are majorly taken. The buyers are usually keen to pay as little as possible for the bitcoin. Sellers also want to focus on selling the bitcoin for as much possible manner as they can. However, there is no stability or fair pricing for the bitcoin. When the people speak about the price on some exchanges, it means the most recent tick price is updated on a certain exchange. Since exchanges are not well connected the determination of the price can also vary within every exchange. Eventually, the way to understand the bitcoin price on every exchange can vary because of many factors which include:
- The quality and volume of the trading data that has been used
- The volume-weighted for every fiat invested in BTC
- The sentiment, supply, demand, and behavior of the users
What Causes Bitcoin’s Price to fall?
Many have considered the bitcoin and other crypto-currencies rises as a huge bubble which is the same as the dotcom and other bubbles that occurred in history that saw the increase of the asset price with no reason at a fundamental level. For instance, Goldman Sachs had already warned investors that prices of crypto-currencies shall be heading to Zero because of its less instinctive pricing. This means the crash shall vindicate a belief in the market that shall note the assets price down which have no real value than zero. However, some major events can make the crash of the bitcoin.
- Traders who are not experienced
Bitcoin value is said to be determined by the sellers and even the buyers in the bitcoin exchanges. However, the short term margin trading and the thin volume result in the sloppy process to be filled up to 90-% of the time that results in more loss and thus crash down eventually
- FUD Media
FUD is the fear, Doubt, and Uncertainly. Media FUD takes place when the bitcoin starts getting some negative process. For instance, over the past few years, Bitcoin has been considered to be dead for more than 400 times. Such type of FUD media can cause panic amongst the people and this eventually results in a short sell that eventually causes the crash.
- Coins get Dumped on the Market
When the huge bitcoin price is being sold in the market, it causes the price to fall. Suppose the authorities of the government seize a certain bitcoin amount from the illegal operations, they then shall auction such bitcoin to the public. As the authorities are not in the business to increase the trade profits and even the huge amounts are being sold below the market value, it results in a bitcoin crash.
Factors contributing to rising in the Bitcoin’s Price to Rising
Some events increase the bitcoin value. Listed are some:
There are bitcoin whales that hold or even channel a huge portion of the bitcoin to private investment funding. This adds to the scarcity of the bitcoin which eventually leads to the bitcoin out of circulation. This also leads to price appreciation as the demand increases for the limited bitcoin supply that raises the cost of every unit.
- Media Hype:
Just the media FUD can cause a panel similar to the media hype can create an improvement in the purchase pressure. The instance was quite evident when the rally of Bitcoin happened in the year 2017 the price was quite close to $20000. Each day bitcoin had made the headlines that grabbed the attention amongst the people which caused recognition and curiosity that eventually pushed up the price.
- Increasing Liquidity
Unlike the olden days when the price fluctuation was 50% that happened on regular basis because of thin liquidity and less market cap, there were so many players who even are involved in bitcoin to date. As the complex trading instrument like exchange-traded funds and futures got approval, the liquidity got deepened. This helps to balance out all the velocity while grabbing investor’s attention and thus improved the price of the bitcoin too.
What’s the future of crypto-currencies?
Ideally, crypto-currencies are still stuck up in the downtrend which started in the mid of December while increasing the fears of a regular crackdown that the government has set. This downtrend can come to an end if the sentiments of the investor change and get in the crypto-currencies favor one more time. There are still beliefs that the biggest reason that crypto is still facing is the lack of fundamentals. None of the crypto-currencies has yet proved out the fundamental price since the currency that shall be accepted by the huge popular as this being a common mode of exchange. This means, in the future as well crypto-currencies shall be seen as a gamble by many people. Eventually, the rise and fall of the bitcoin price will happen as the investors believe in the reasons that are shared above.
Keywords: crypto-currencies ,bitcoin, Media FUD ,bitcoin whales, crypto