The price of Bitcoin is continuously fluctuating. This price fluctuation is not just confined to Bitcoin but it has affected other cryptocurrencies as well. This is one of the reasons why many people are refraining from investing in Bitcoin. But once you understand the factors that affect the price of Bitcoin, you can make a wise decision about it. Some of the factors that affect the price of Bitcoin are
Psychological factors play a key role in driving the price of Bitcoin. These factors are called animal spirits and this term refers to the decision made by investors and is based on the behaviour of other investors in the market. Media also plays a crucial role in deciding the price of Bitcoin. The price of Bitcoin and other cryptocurrencies is largely affected by the hype created by media with regards to its price
If media provides a positive hype, investors are further encouraged for BitcoInvest and this in turn drives its price. This price rise due to media coverage was more prevalent in the initial days of Bitcoin analysis. Also a similar effect on the Bitcoin price is observed when some of the high calibre companies go public with their announcement. The investors start investing in the company and the value of Bitcoin increases exponentially from a low value to a higher value.
Politics of a nation will affect the value of national currencies. This in turn adversely affects the price of Bitcoin. For example-The national referendum that caused Britain to leave the European Union or Brexit as it is popularly called caused an increase in the value of Bitcoin and a decrease in the value of British pound. Similarly elections in the USA also caused a rise in the price of Bitcoin. Experts quoted the uncertainties in US economy as the prime reason behind this increase in price.
Even though cryptocurrencies are not currently under many regulations, certain countries are trying to introduce regulatory measures. These regulatory moves severely affect the price of Bitcoin. The price of Bitcoin increased by 2% in just 24 hours as soon as Japan announced that it would consider Bitcoin as legal tender. When China decided to close down Bitcoin exchanges and banned ICOs, the price of Bitcoin reduced by around 29% in just a matter of 24 hours.
In August 2017 Bitcoin underwent a split and one more currency called Bitcoin cash was developed. Through this new currency, one could process 30 transactions every second. Even this led to fluctuations in the price of Bitcoin.