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What Can Affect Movement In Bitcoin's Price?

For those just beginning to explore bitcoin acquisition or investment, the question of what affects price is an important one. It’s easy enough to look at charts and see that the price fluctuates quite a bit from day to day, month to month, and beyond. Indeed, cryptocurrency as a whole has already become known as a particularly volatile financial asset. What charts don’t spell out for you however, particularly if you’re new to cryptocurrency, is why prices fluctuate – and more specifically what factors are involved.
To some extent we can chalk up the general volatility of bitcoin to the fact that it’s new. People are still figuring out what to make of it, and that leads to a lot of buying and selling. With a relatively new commodity, people may be more likely to make snap decisions (such as selling off the second the chart starts to show a dip), and amateur investors may be more likely to buy in without doing a full assessment of the market. Throw in high-volume investors getting involved at different levels early on, and it’s no wonder bitcoin has been relatively unpredictable.
Even so, there’s value in trying to figure out what moves any market. And as far as we know, these are some of the factors that appear to play the biggest role.
Regulation
Government regulation is probably the most prominent factor that can shift cryptocurrency prices. Because cryptocurrency is still relatively new, and poses a threat to disrupt regular financial systems, governments around the world are still figuring out how to react to it (or in some cases whether to react at all). There are a couple of ways in which government intervention can influence prices. Basically, they can affect prices through buying and selling currency, and they can also attach penalties to cryptocurrency acquisition. In some cases they also simply recommend that populations steer clear of cryptocurrency, which can scare some people off and thus result in lower demand.
Futures
Bitcoin futures trading started in December of last year, and some have suggested that this negatively affected the bitcoin price almost immediately. The cryptocurrency had reached an incredible high over $19,000 and then promptly fell to what would ultimately be a low under $6,000 in the months to follow. It was a dramatic swing and one that confirmed a lot of people’s suspicion that bitcoin had been in a bubble. But the drop corresponding so closely with the introduction of futures trading indicated that this trading does have the ability to influence pricing. Basically if powerful firms speculate on futures in a way that projects losses, the losses can be soon to follow.
Major Investor Activity
Part of the point of bitcoin is that it’s mysterious. We can see on the blockchain when transactions occur and even how much is traded – but not who’s doing the trading. That said, the widely held belief is that much of the bitcoin in circulation, if not most of it, is controlled by a relatively small and very wealthy group of major investors. That gives those investors an inordinate amount of control over the price of bitcoin. As the thinking goes, if they control enough of the market and they decide to buy or sell in large quantities, the price will quickly react.
Spending Opportunities
New opportunities to spend bitcoin can also increase demand and the price thereafter. Such opportunities are hard to come by, and bitcoin has already been rejected – at least for now – by the likes of Amazon and other major retailers that could make a difference. One interesting area to watch in this regard is sports betting, however. It’s gradually being legalized in the U.S., and looking through the most recommended sites in the UK, there’s a massive industry already established here. These sites’ expansion to the American market, and the acceptance of bitcoin by even a few of them, could mean a lot more spending opportunity.
Altcoins
To this point, bitcoin and the altcoins (which is a term that means all cryptocurrency that isn’t bitcoin) have tended to move in conjunction with one another, at least to some extent. However, there is potential for a particular altcoin to emerge at some point as a legitimate challenger to bitcoin at the top of the crypto market. It doesn’t seem likely to happen soon, but if and when it does it could drastically damage bitcoin’s price. The good news is that this is unlikely to happen overnight, so there should be some warning.

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