Bitcoin has, in the past decade, expanded the boundaries of what the modern world considers a functional currency. BTC first rose in 2009 to become the first-ever cryptocurrency, which means it did not feature a physical form like most others. The digital currency has, over the years, peaked in popularity to become a contemporary choice for millions across the globe thanks to the many upsides it offers.
Even with its popularity, the volatility of Bitcoin is a vague field that most people find confusing. The question on many buyers’ minds before investing in the digital currency in how its value is set so that they can better identify when a change is coming. Since its initial release, one BTC has risen in value from a measly six cents to currently selling at more than 6000 dollars. In its first year of business, Bitcoin had already achieved a price of 1000 dollars, and it has never dropped lower than that ever since. If you are looking to invest in the niche or already have some BTC for yourself, here are some telltales you can use to identify when a change in the price is about to hit:
A Shift in Supply and Demand
Even though Bitcoin operates independently without the influence of a government or institution, it still abides by the elementary economic laws of supply and demand. The higher the demand faced by the product, the more expensive each coin is going to be. At the very beginning of the Bitcoin journey, the need for this currency was barely scratching the surface. The first transaction ever conducted with the money saw 10000 BTC coins exchanged for two pizzas. Today, considering the immense value of the crypto, the coins would be equivalent to about 64.5 million dollars.
The growing use of Bitcoin has seen its adoption in numerous thriving industries, including that of gambling. Bitcoin casinos have been on the rise in the past few years to accommodate players that use this kind of money. Some of these platforms are entirely dedicated to meeting Bitcoin gambling needs, while others incorporated the currency alongside conventional ones like PayPal, Visa, Neteller, and Skrill. The most popular BTC casinos that offer real money play with the digital currency include FortuneJack, BitStarz, Cloudbet, among others. The use of this currency to gamble does not make any changes to the gameplay procedure of sets or the payouts that are provided.
Changes in Political Events
Like traditional currencies, the events that take place in the political world affect the price of cryptocurrencies. However, the uncertainty of these grounds takes the price of BTC in the opposite direction as it would with other regular currencies. In most cases, when people lose faith in the stability of their politics, they abandon their currency and shift their focus to others, which causes theirs to lose value. Bitcoin usually stands as one of the first places people run to when such events occur.
One of the significant events that can be used as a reference for this BTC price shift is the Greek crisis that unfolded in 2015. The failing economy saw a lot of people invest in BTC to avoid the crippling effect of the Drachma collapse. The same result was witnessed when President Donald Trump was elected into office, and it continues as the trade war continues. Therefore, if you sniff an oncoming major political shift in the air, then prepare for a change in BTC price to follow.
A fluctuation in the Bitcoin market price can also shift as a result of Bitcoin halving. The creator of this currency, Satoshi Nakamoto, ensured that only 21 million of these coins can ever be in existence. This element separates it from all others since an authority cannot inflate it. The system is also crafted that after 210,000 coins are generated, the Bitcoin rewards for the mining process are cut in half to lengthen the period to get to the 21-million mark. The halving process has happened twice already, which has driven down rewards from 50 BTC to 12.5 BTC. This event usually occurs after about four years. Accordingly, the next halving can expect to bring it down to 6.25 BTC.
It is unlikely to predict whether the price will rise or fall with the third BTC halving, but it will surely have an effect. The second event that took place in 2018 saw a lot of mining pools abandoned, which was also encouraged by currency diving to cost about 6000 dollars from more than 20000 dollars at the end of 2017. However, the currency was quick to recover and began to stabilize in 2019.
Increase in Mining Costs
The BTC cryptocurrency is often compared to diamonds, where a predetermined number of them is already identified, just like how the quantity of this precious metal is known. The similarity of Bitcoin with this precious metal goes beyond this factor and ventures into how the currency is obtained. BTC is acquired through mining, which is done with the help of complex computer programs that create a puzzle. The miner gets a BTC reward for solving the complicated math problem along with any accumulated costs incurred since the last batch of coins was awarded.
The Bitcoin mining system is designed to ensure that one block of the currency is discovered about every ten minutes. If popularity in the currency increases, so does the number of people seeking to mine this product. Instead of the algorithm releasing more blocks, it only makes the puzzle more challenging to solve. Thus, the cost of mining increases, which in turn drives up the value of BTC.
Even though Bitcoin is decentralized and cannot be controlled by any central government, some regulation adjustments can affect its price. These laws affect how investors view the currency, which in turn either drives its value up or down.
Even though a lot of governments remain neutral on the issue of cryptocurrencies, some have made decisions on where they stand, which has had significant effects. The biggest one yet was when China, one of the world’s biggest economies and significant BTC markets, decided to close a couple of crypto trading platforms. As a result, the currency lost value drastically. In February of 2018, BTC took its biggest hit yet from trading at more than 20000 dollars to a little over 6000 dollars in 24 hours, which saw it lose 100 billion dollars. Such a significant loss was due to major governments like South Korea and India following China’s suit. Japan soon recognized it as a legal tender, which drew back some value to the currency in the following months.
The media is known to influence how most people act even outside the financial world, so it makes it one of the most significant signs of a shift in BTC value. When the media focuses on covering the ins and outs of Bitcoin, more and more people understand what it is about, which influences their decisions to invest in the coins. This information can also be shared easily among friends with the age of fast connections through social media.
Like with other currencies, the value of Bitcoin is not entirely predictable. Therefore, you need to be attentive to the patterns created by the elements listed above to decide on your next move regarding digital money.