Bitcoin prices are driven by so many factors. At a macro level, it is the factor of demand and supply that determines whether prices move to the upside or downside.
To fully grasp the volatile nature of Bitcoin prices, one needs to understand the following points:
1) What drives the interest in Bitcoin?
2) Who is interested in Bitcoin?
3) What is Bitcoin exposed to?
4) How is this exposure managed globally?
In this article, I will answer the questions above and then connect the dots with you here as to what drives bitcoin prices.
What drives the interest in Bitcoin?
By now it should be evident that the Blockchain technology will be an important part of the Evolution of Transactions, just like the Internet was the Evolution of Information.
But what does that have to do with Bitcoin?
Bitcoin represents the global interest in the Blockchain Technology, but it not only is an indicator for the usage itself, it serves as a store of value and Speculative Asset of Investment.
That said, the fact that Bitcoin is hard-capped at 21Million Coins; means there wont be more than 21million Bitcoins created ever.
People realize that the rarity of these virtual assets represent a whole Technological Revolution by itself.
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Who is interested in Bitcoin?
We have now established that Bitcoin, unlike Fiat currencies, is deflationary and there can’t be more than 21million bitcoins, ever.
So, who would be interested in an officially approved asset class, that has limited Supply, represents parts of the Upcoming Technological Revolution (Tech 4.0) and is still in its very early stage of development?
- Governments – trying to adopt the new technology
- Financial Institutions – trying to gather the new store of Value
- Countries – trying to ease their transactions across border
- Politicians – trying to position them right for the Future
- Business Leaders – trying to adapt to new consumer behavior
- Planet Earth – trying to establish Renewable energies for mining
Yes thats quite alot.
But keep in mind that besides them, there is, roughly speaking, not even 1% of the Global Civilization actively involved in it.
Insane. I know.
What is Bitcoin Exposed to?
With all those different lobbies, parties, countries and influences around the topic of Digital Assets and the Blockchain technology, Bitcoin is bound to move in price.
Greed remains an essential part of human civilization, society and capitalism.
Furthermore, Governments rule over the global markets (we stick to governments here as the article is about Bitcoins price, not the Ruling party behind governments) and they can use the global agenda to their will and create a false narrative, manipulating the still unregulated Crypto-Market to buy-up the limited supply of Bitcoin for them and their interested lobbies.
How is this managed globally?
This is especially interesting to observe, as, although companies and institutions like; Apple, Amazon, Goldman Sachs, Deutsche Bank, NASDAQ, and Individuals like: Peter Thiel, George Soros, Kevin O’Leary, Warren Buffet & the Rockerfellers, are already involved and/or stated their involvement in Blockchain and Bitcoin.
But the management is far from positive.
False Narratives, Fear mongering and active denial of the inevitable revolutionary technology is making its circles in Mainstream Media.
Why Bitcoin price is volatile
By now, I believe you have a rough understanding about how market actions drive the prices of Bitcoin. These actions are mostly made by whales who in-turn drive prices to the upside or downside.
Those OldWhales (like I love to call them) mount pressure on prices for them to be in a neat spot to enter the market. Banks and other financial institutions also mount pressures as well.
Getting a safe investment option out of a volatile asset, the market needs to be sold out and crippled for banks to make a profit in this.
Bitcoin and Blockchain space is still in a very infant stage. Quick price actions are expected as the world continues to find value for this new Technology. On the other hand, speculative price actions and manipulative forces are forcing the price to a level their lobbies can buy in easily. Understanding the trends and market cycles helps one make informed in this space.
Disclaimer: This post has been contributed just for educational purposes and should not be regarded as financial advice of any sort.