Main Reasons Why Bitcoin Price Fluctuates



Main Reasons Why Bitcoin Price Fluctuates

If you've been following cryptocurrency news, you know that Bitcoin price has always kept fluctuating. And this is one of the factors that many crypto traders keep an on. With most digital currencies, price fluctuation is like a daily routine. Thus, most online traders are used to Bitcoin's volatility.

The trading value for this cryptocurrency had surpassed $44,000 by February 2020. However, this doesn't guarantee online traders that Bitcoin prices won't drop significantly. Being a digital currency, people use Bitcoin to purchase goods, pay for services, or trade it on platforms like bitcoin-buyer.app.

Today, people use crypto exchanges like Bitcoin supreme to trade efficiently and learn more about this digital currency. The purpose of such platforms is to help individuals become sharper and better crypto traders. Current events and emotions of a trader can affect their decision-making process. Such systems keep the head of the trader clear by analyzing trades and the market on their behalf.

A currency should be stable for a consumer and investor to determine prices for services and goods. But, this isn't the case for Bitcoin. And this explains why many people hesitate to adopt or invest in Bitcoin. To some investors, Bitcoin stability might be mere speculation instead of real investment. Thus, they don't take it seriously. Here are the main reasons for Bitcoin price fluctuations despite having been around for more than a decade.

Bitcoin Is Not a Stable Currency Yet

Bitcoin is yet to reach the stability status of a currency since its introduction in 2009. Thus, the cryptocurrency is not viable yet. And that's because many people have not acknowledged it yet, while others don't even know it.

Currently, people circulate Bitcoins online. And this happens among the citizens of developed countries like the United States. Some countries have even banned Bitcoin usage. And this might not be a good sign since countries should see it as the alternative currency for fiat money. That's the only way Bitcoin will become viable and stable. And a digital currency should have global usage to be seen as an alternative form of money.

Nobody Regulates Bitcoin

Perhaps, another reason why this cryptocurrency's price keeps fluctuating is the lack of a regulatory authority. Currently, no central bank or government regulates this cryptocurrency. And a currency should have proper regulation to stop fluctuating.

Additionally, the demand and supply of other cryptocurrencies can affect Bitcoin's price. And crypto exchanges sometimes drive the demand and supply for digital currencies. Nevertheless, this has sometimes resulted in unethical practices due to the absence of a regulatory authority. And these practices are likely to continue in online trading since nobody regulates or controls Bitcoin.

For instance, wash trading is a common unethical practice. And this is a method by which a party manipulates the crypto market by purchasing and selling similar assets to inflate the trading volumes. Typically, investors do this to seem more legit and capable. Consequently, some investors become uncontrollable and, therefore, boost trading thereby, creating a questionable exchange rate.

Bitcoin Improvement

Bitcoin network effects have increased the use of this cryptocurrency over time. Network effects occur when the value of a good or service grows due to its growing usage. Since the creation of Bitcoin, its popularity has increased. And if this continues, there may be a time when this cryptocurrency will become an accepted alternative currency globally.

Bitcoin adoption has increased over the years. Today, Bitcoin is an acceptable exchange medium in different parts of the world. And this makes many people see it as a potential alternative currency. Consequently, Bitcoin demand has increased, and this has pushed its price higher.