The price of Bitcoin has been dancing around $8,000 in November, after almost hitting A$10,000 in the past month, and rising over 1,850% since 2015. All of this shows how volatile the currency is, prompting the following question:
1. why bitcoin fluntuate
2. why is bitcoin price not stable
3.why is the bitcoin dance All this questions are going to be answer in this post.But first and foremost let understand what bitcoin dance is.
Bitcoin dance
This is the fluctuating period of bitcoin, the period bitcoin price move up and down and not stable.This happen as result of several factors:
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If a government makes a formal pronouncement either to accept or reject bitcoin, then it automatically affects the price.
In the context of supply and demand discussions, demand refers to the quantity of a good that is desired by buyers. An important distinction to make is the difference between demand and the quantitiy demanded.1. why bitcoin fluntuate
2. why is bitcoin price not stable
3.why is the bitcoin dance All this questions are going to be answer in this post.But first and foremost let understand what bitcoin dance is.
Bitcoin dance
This is the fluctuating period of bitcoin, the period bitcoin price move up and down and not stable.This happen as result of several factors:
Not Used in Real-World
Even with the rise of the Bitcoin price, there is still a complete lack of real-world uses for Bitcoin or any of the cryptocurrencies. This means that there is little underlying value in using Bitcoin (relative to its price anyway) and the price is set almost entirely by speculation and expectation of future adoption.
Until there are some concrete use cases developed for Bitcoin that are used by millions of people around the world, the price will continue to fluctuate in the way we are seeing.
Competition
The crypto world is pretty new and there are a lot of digital coins that start appearing. What all of them have in common is a goal to become the most significant coin in the cryptocurrency space.And the struggle for relevances by the new coin is having a serious effect on bitcoin as the mother of all cryptocurrencies.
Governments policyThe crypto world is pretty new and there are a lot of digital coins that start appearing. What all of them have in common is a goal to become the most significant coin in the cryptocurrency space.And the struggle for relevances by the new coin is having a serious effect on bitcoin as the mother of all cryptocurrencies.
If a government makes a formal pronouncement either to accept or reject bitcoin, then it automatically affects the price.
Demand and Supply
The quantity demanded refers to the specific amount of that product that buyers are willing to buy at a given price. This relationship between price and the quantity of product demanded at that price is defined as the demand relationship. Supply is defined as the total quantity of a product or service that the marketplace can offer. The quantity supplied is the amount of a product/service that suppliers are willing to supply at a given price. This relationship between price and the amount of a good/service supplied is known as the supply relationship. When thinking about demand and supply together, the supply relationship and demand relationship basically mirror each other at equilibrium. At equilibrium, the quantity supplied and quantity demanded intersect and are equal.
The supply of Bitcoin has been set to 21 million out of which 80% has been mined by the miners. The supply amount is fixed irrespective of the demand. The demand of Bitcoins is based on the trust and popularity among the crypto community members. When the popularity increases, the demand experiences an upthrust. However, because of the limited supply, the price of Bitcoin increases. On the other hand, the decrease in demand causes the Bitcoin price to plummet.
Illegal Activities
Currently, there are lots of activities that require Bitcoin in order to operate. Illegal activities take the lead in this context, with Ponzi and MLM schemes following closely.
When international governments crack down on such activities, then the price of the currency falls or rises.
Awareness & Recognition
One of the major problems of bitcoin prize fluctuating is that there are more Bitcoins oscillating in the digital market as a result of fresh awareness and recognition of the cryptocurrency by new companies and nations, and many investors are ready to make some huge profit out of them.Nevertheless, when people invest in Bitcoin and end up selling in huge numbers, it can end by having the market crushed. This always is the case when the merchants invest too much Bitcoins in the market with the primary intention of accumulating profits within the shortest time possible.
When they are done with their mission, they dump everything, and this leads to the crypto market being adversely affected.
List of Companies Who Accepts Bitcoins as Payment!
Fomo
FOMO (fear of missing out) Is the most powerful emotion in crypto investing. Fear of missing out often affects the cryptocurrency market when investors start to become concerned that they are going to miss out on a buying opportunity that could lead to enormous, triple or quadruple digit gains.
Why is FOMO So Relevant in the Cryptocurrency Market?
FOMO is unimaginably significant for the cryptocurrency money advertise in light of the fact that probably the most amazing additions in the historical backdrop of fund have been seen with these advanced monetary forms, for example, Bitcoin, Ethereum and Litecoin. These cryptocurrency forms of money rose from only a couple of pennies to being worth thousands, or even countless dollars – just like the case with Bitcoin.
Many people in the cryptocurrency investing space are well aware of the immense opportunity that still exists in cryptocurrencies today, and no one wants to miss out on the next incredible rise. What this means is that as soon as enough people think that a particular cryptocurrency has the potential to go on a big run, large numbers of people can start buying the currency because they have FOMO, and they don’t want to miss the opportunity.
FOMO is much more of a factor in the cryptocurrency market than it is in many other markets. This is because blockchain technology and cryptocurrencies are both still in their infancy, so many people believe that there is an enormous potential for exponential growth. Oftentimes, the investors who make the most money on an asset are the ones who bought in the earliest.
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