All You Need to Know About Bitcoin’s Pricing
Bitcoin, a prominent digital currency is certainly not a far-out name but its pricing culture often makes it the talk of the town.
Being developed a decade ago, this virtual currency has certainly gone through an immense amount of ebbs. It flows before it gained dominance in the crypto environment.
It has been observed that the Bitcoin prices witness alterations every 30 seconds. It is the minute time span to figure out its behavior and trend.
There are several reasons to attribute to this significant change, but one must acknowledge that, unlike traditional currency, Bitcoin is not influenced by any nation’s monetary affairs.
Bitcoin’s Pricing History
Over the decade, Bitcoin has shown its volatile nature. Therefore, there have been considerable declines and inclines which are nowhere hidden from the investors.
The first prominent instance that occurred was in 2011 when Bitcoin jumped from $1 to $32 in merely three months. It indicates a rise of 3200% but was later dropped to $2 in the same year.
In the year 2012 Bitcoin again witnessed a rise from $4.80 to $13.20 between May to August. Next came the decisive year for Bitcoin where digital currency started to trade at $13.40 and also went through significant price fluctuations.
The first phase of fluctuation showed price acceleration where it hiked up to $220 at the beginning of April 2013, followed by the price rallies of $123.20, $1156.10, and $760 by the end of the same year.
This fluctuating scenario continued heavily between 2014 to 2017 before the fifth significant price bubble hit the hemisphere.
At the beginning of the year 2017, Bitcoin hovered around $1000 followed by a brief decline and then a considerable price rise from $975.70 to $20,089 in 9 months.
Alongside, this year brought Bitcoin into the major limelight when Governments and Economists began to develop alternative digital currencies for the same.
In the year 2019, the price crossed $10,000 and then fell to $7,112.73. The crypto sphere witnessed many happening events in the year 2020 with the economy shut down during the pandemic.
Bitcoin began rolling into progress with the price of $7,200 and closed at $24,000 with the year-end which indicated an increase of 224%.
The following year (2021) it began ruling the sphere with $40,000 which kept changing and touching new heights every now and then.
What are the Factors that Influence Bitcoin’s Price?
When we talk about What Determines the Price of Bitcoin, we often tend to think of the market demand and supply curve. Isn’t it? And luckily, the case is the same here as well but with slight differences.
According to protocol, the new Bitcoins are introduced for market circulation when the miner’s process blocks transactions at a fixed rate. These new coins are so designed to slow over time.
For instance, the growth of Bitcoin slowed down from 6.9% to 4.4% and 4.0% in the years 2016, 2017, and 2018 respectively owing to the block rewards halving.
Consequently, this scenario creates the demand for Bitcoin at a faster rate which drives up the price. Ideally, Bitcoin is capped at 21 million, and by February 2021 18.638 million. Bitcoins have been mined which means they are already in circulation.
So, now what remains are just 2.362 millions of them to gain activeness and are yet to define their impacts on the pricing mechanism.
Moreover, the “mining” process of Bitcoin considers complicated cryptographic mathematical problems. The complication of the process defines the basic prices such as transactional fees, etc.
Because it is considered as the virtual cost of production. Additionally, with the rapidly emerging altcoin, the competition for Bitcoin is touching its peak. As of March 2021,
The Ethereum, Binance Coin, Cardano, Polkadot, Dogecoin, Tether are the major role players to create a competitive room for Bitcoin.
Thus, we can say that these rolling and popping competitors impact Bitcoin pricing up to a considerable extent. But guess what Determines the price of Bitcoin? that still has an edge over its competitors with its higher visibility.
The cryptocurrency exchanges define the level of regulatory compliances of each exchange. The Simple Agreement for Future Tokens (SAFT) is one such framework that crypto changes derive on their own and thus impact the prices.
Also, the Bitcoin pressure governs its price structure up to a great extend. Say, owing to speculations and media coverage some Bitcoin holders get panic and decide to release their holding.
On Contrary, the positive pressure results in buying additional Bitcoins for some users. As a result, we can firmly say that such activities govern Bitcoin’s pricing structure.
Conclusion
It has been quite evident that Bitcoin, being the most talked-about cryptocurrency is influenced by the various market scenarios which are yet to settle.
But what relaxes the nerve is the fact that since final Bitcoin is expected to be mined somewhere in the year 2140. This implies that the shrinking availability of new supply leads to increased demand.
Thus, the prices hike when the demand spikes which is still the hopeful shape.
