If you are following the Bitcoin market, you have probably noticed that the Bitcoin price is going up and dropping rapidly almost on a daily basis. These changes can reach over 20% in 24 hours. This is not something new for most people, but have you ever wondered what affects these changes in the price of Bitcoin? We have created a short list of a few factors that have a direct impact on the price of this successful cryptocurrency.
- The Hype
As you are probably aware, there are many cases when the decisions of investors are affected by a wide range of psychological factors. To put it simply, they are following the steps of other investors. We can all agree that the positive, sensationalist coverage of the online and print media have increased the interest in Bitcoin investing, and that’s why the price of this digital currency has started increasing fast. But, we can also say that news that is not confirmed yet can result in negative effects. So, it’s a two-way street and every serious investor should not make an impulse decision when buying Bitcoin or selling this alternative currency.
- Laws and regulations
The surprising interest in Bitcoin has caught many governments by surprise. That’s why their regulatory bodies are trying to do their best to suggest and enforce different types of laws and regulations related to Bitcoin use and trading. Every now and then we are reading about decisions made by governments and parliaments focused on Bitcoin-related taxes. The announcement of moves like this alone are affecting Bitcoin price. A few weeks ago, China has closed a few Bitcoin exchanges which made the Bitcoin go down by 30%. But, it seems that all these regulatory changes have short-term effects for now.
- Political uncertainty
We are living in times when political uncertainty around the globe is at a very high level. In other words, there is no national currency that is considered to be completely stable. Whenever something out of the ordinary happens, like Brexit for example, there is an increased interest in Bitcoin. This leads to change of price of Bitcoin. So, if there is an upcoming event that can cause uncertainty, it may be a good idea to buy Bitcoin right away and sell it later.
There are the three main factors that affect Bitcoin price although there are dozens of others things that have a direct or indirect impact.
"When Coinbase added Bitcoin Cash earlier this month, the price for BCH spiked 64% in one day.\r\n\r\nThe increased popularity of bitcoin itself will help a following on affect as more people start to look for alternative currencies to invest…" https://t.co/73G91fe7GG pic.twitter.com/29dhgFyc36
— InvestOpen Community (@investopencom) 21 de febrero de 2018