Top 5 Factors That Affect Bitcoin’s Value

If you follow Bitcoin and any other Cryptocurrency closely, you probably have seen its price going up-and-down pretty frequently. But, do you know why such a thing happens?

In this article, we’re going to focus on that and explain as much as possible. Hence, let’s not make any further ado and jump into the topic right away.

Why Is Bitcoin’s Pricing So Volatile?

Just like the stock market, the price of Bitcoin, too, gets affected by more than one factor. Let us tell you more about it.

Factor – 1: The Node Count.

The node count of a Bitcoin community shows the strength of the same. For example, if your Crypto community has a massive number of people dabbling into it, its price won’t go down so easily at all. It’ll also be easier for you to avoid any potential crisis.

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Besides, the node count can also tell you a lot about the security and decentralisation of  your community. The better it is, the lesser your risk of getting hacked will be.

Note: Besides the node count, you should also take a look at the market capitalisation of your chosen currency – Bitcoin, in this case. Don’t forget to compare it to something else. It’ll help get an idea about the best possible option available in the market.

Factor – 2: The Cost Of Production.

The production cost is yet another factor that can affect the value of Bitcoin or any other form of Cryptocurrency. Let us give you an example to make the point a little clearer.

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Suppose, you’re a miner and trying to mine Bitcoin on your computer rig. It will take quite a lot of time to find one, decipher the maths behind it, and verify the transaction accordingly.

Now, doing all these can require quite a lot of time, money, and energy. And, the more of the same was needed to find the coin, the higher the price will be, especially if the reward wasn’t decent enough to cover the expenses properly.

Factor – 3: Existing And New Competitors.

Thanks to the popularity of Bitcoin, the overall number of Cryptocurrency is increasing quite massively. And, the more the amount increases, the more options people’ll get in the market.

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This, in turn, can decrease the price of Bitcoin to some extent.

Also, the charge of a trading platform, like bitcoin billionaire, can change depending on what you’re transacting. For example, trading Bitcoin usually costs more than Ether or LTE. So, it might also prompt people to sway away from BTC and choose something else.

Factor – 4: Government-Based Regulation.

Certain central governments don’t appreciate the unregulated and decentralised character of a Cryptocurrency module. Hence, they tend to control it in one way or another.

For example, many people set a specific tax on every Crypto transaction to limit the usage to some extent. However, in most cases, this tax is applicable on one or two coins.

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Hence, again, this might prompt many people to avoid those “restricted” coins entirely and go for something else. This might create an imbalance in the pricing as well.

Factor – 5: Social Media Hype.

At this point, it seems like social media is controlling almost everything. And, the same goes for the Bitcoin market as well. Let us give you an example to clarify this better.

In 2017, Elon Musk or Tesla tweeted that it’ll start accepting Bitcoin as a form of payment. It, in turn, made the price of the same go sky high. And, again, in 2020, when the company said that they’ll stop accepting it, the value of Bitcoin went down again.

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Besides, Elon Musk has influenced the pricing of Dogecoin quite a few times as well. Due to this reason, the price of Cryptocurrency can increase or decrease depending on how the social media hype is going on with it.

Wrapping It All Up!

So, that’ll be all for our blog on Bitcoin and the factors that can change its pricing. We tried our best to offer as much information in this regard as possible. However, if you think that it’s not enough, then don’t forget to comment your thoughts below.

We’ll try to reply to you as soon as we can!

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