Nowadays, beginners are worried about investing in bitcoin because they are unaware of the price fluctuation of the bitcoins and the factors affecting them. But this is nothing to get concerned about; bitcoin has been facing these downfalls and uplifts from the day it came into being. If you are a beginner, this article will be a complete guide about the factors that affect bitcoin prices so you can easily track them and buy and sell your bitcoins accordingly. And it is an excellent method if you want to increase your bitcoin assets; bitcoin investor will guide you further about these factors.
Demand and Supply
Demand and supply of bitcoin is a factor that influences its price. As the day bitcoin got launched, its owner already had decided that there would be only 21 million bitcoins in the world forever. Till now, four million bitcoins are left, which are not in anyone’s ownership, but for the coming years, this gap will also become filled, and there will be no more bitcoins left available to be purchased. Then the world will face an uplift in demand for bitcoin, and bitcoin prices will rise significantly. Unlike other currencies printed in more numbers when the need arises, their value decreases when available in more numbers. The bitcoin does not have any threat of inflation, so its value will keep increasing even after the 21 million bitcoins went into ownership or people.
Rules and Regulations
Although any country does not control bitcoin, the rules and laws of countries influence its prices. Not all countries have legalized the use of bitcoins inside them, so it causes the price of bitcoin to decrease to some extent. The research has shown that almost 148 countries in this world have legalized the use of bitcoin. It includes populated countries like Australia, Germany, America, Hong Kong, Canada, and many more. But some influential countries like China and India have still banned it. As these countries cover 38 percent of the world’s population, it impacts the prices of bitcoin. Bitcoin will face a backlash in its costs if any other government decides to ban bitcoin. And if India or China makes it legal, then the world will witness a significant increase in bitcoin prices. So the owners should decide to buy and sell it accordingly.
As all crypto users know, bitcoin miners get a reward after adding new blocks into the blockchain. In 2009 the compensation used to be 50 bitcoins per block. But it was not possible to always pay 50 bitcoins as there are many competitors, and their number is increasing daily. So bitcoin authorities have decided to decrease the reward of mining to half after every 210000 blocks. All this is known as the bitcoin halving event. This halving event reduces the premium of miners but becomes the reason for the increasing value of bitcoin. The halving event of bitcoin takes place almost every four years. Bitcoin authorities did the first halving event in 2012, 4 years after the release of bitcoin, and the reward thus decreased to 25 bitcoins per block. After the other four years, a second halving event reduced the mining reward to 12.5 per block. The next event might get held in 2021 when the prize is as low as seven bitcoins per block. But the prices of bitcoin will get high after this.
Here is an emotion meter specifically designed for bitcoin users. This meter has two parameters of greed and fear. The fear is more when the pointer points towards 0 and 30. Fear means when people hesitate to invest in bitcoin because they fear becoming bankrupt and losing all their money. This halving also causes a decrease in the prices of bitcoin. While when the meter is above 80, it means the market has the greed of Bitcoin, and many people are making a purchase of it. This change in meter causes a rise in the value of bitcoin. It is better to buy bitcoin when the ratio of fear is high and sell bitcoin when the greed of bitcoin is high. It will leave a profit for you.