As of today, Bitcoin is the most widely-used and influential crypto. So, it is not surprising that its rate increases year after year. Still, there are experts that claim that it will burst like a bubble one day. That makes many potential investors refrain from buying it, which means missed profits. Want to form your own well-weighed opinion? Read on.
Bitcoin was the first cryptocurrency to enter the market. This event took place more than a decade ago ― in 2008. So, over this period, traders and investors had an opportunity to make sure that this asset was substantial enough. Its value and impact keep on growing year after year. Yes, there are certain perturbations from time to time, but the situation recovers stability every time as well.
It is well-known that this crypto is decentralized and cannot be controlled by any governments and banks. Then, how is the Bitcoin price formed? There are 8 factors:
- Long-term investment volumes. The higher demand, the higher the rate.
- Short-term trading activity. This crypto is characterized by increased volatility, which allows speculators to make good money from its daily fluctuations. Every day, one can watch billions of bubbles and liquidations in the corresponding charts. That provokes extra fuss and panic, which attracts more traders and pushes the rate higher and higher.
- Development of decentralized finance. New inventions in the sphere of blockchain contribute to the value of this crypto.
- Popularization of Bitcoin as a payment means. It is already supported by PayPal, Visa, and Mastercard.
- Decisions and announcements made by governmental bodies and politicians. Although they cannot have a direct influence on its rate, such news makes a huge fuss.
- Statements made by celebrities, big businessmen, and influencers. The most commonly known example is Elon Musk.
- Reductions in refunds paid to miners. Such procedures are predetermined by the code of this crypto. They took place once in 4 years (approximately). And, according to statistics, within 1.5 years after such a reduction, the price of the crypto grows by several times. So, for the latest time, it was executed in May 2020. At that point, the rate was around $10,000. And 1 year later it reached $60,000.
- Growth of its user base. The more wallets, the higher the value.
Also Read: The Great Bitcoin Scam
In sum, as of now, there is no single opinion on whether the rate of this coin will move upwards or downwards, although there are many proofs in support of the first variant.