The demand and supply factors that determine the price of bitcoin are two simple words. When bitcoins are in high demand, the price will rise. If there is less demand, it will fall.
Based on future expectations, the price of Bitcoin will show how much people will pay to buy it at a particular time. The same applies to the price of any currency, fiat or cryptocurrency.
It is still quite volatile because Bitcoin’s market capitalization is small compared to the US dollar and the euro. As the market matures, it will likely become less volatile. The fun thing about this is that no one can predict when it will happen. It could be five, ten, or twenty years in the future.
Will Bitcoin Rise in Value?
There are many factors indicating that Bitcoin is a lucrative and high value crypto asset. These factors include:
- Limited supply: the bitcoin supply is limited. It’s currently limited to 21 million. There are currently 17 651 995 (84%) bitcoins available on the market. It may take 120 years to reach the 21 million limit.
- Technological advancement: New features, security enhancements and the rise of cutting-edge automation tools like Bitcoin Method for instance, may help increase Bitcoin’s use and positively impact its price.
- Favorable regulations: If governments are supportive of Bitcoin’s use, it would increase its price.
- Public perception: If more people see Bitcoin as a valuable asset or money and trust it, it will increase its demand and price.
Factors Opposing Bitcoins Rise?
Bitcoin’s price could fall due to technological problems, ecosystem failures and unfavorable restrictions, market manipulation, negative media attention, or any other reason people lose faith in the currency.
Remember that Bitcoin can be traded in pairs, just like other currencies. Trends in bitcoin’s price can be quite different when it is traded for US dollars, as opposed to, for instance, Ethereum’s Ethereum.
Mainstream Institutional Adoption of Bitcoin
In 2021, many mainstream companies from multiple industries expressed interest in blockchain and cryptocurrency. AMC, for instance, said last year that it would accept Bitcoin payments. Square and PayPal, two of the largest fintech companies, are betting on crypto by allowing customers to purchase on their platforms. Tesla continues to debate whether Dogecoin payments are accepted by the company, even though it holds billions of crypto assets. Experts expect more of this buy in since there has been a tremendous amount of attention driving the crypto industries growth. It is highly likely that larger, more global corporations will be able to accelerate this adoption in the second half of 2022.
Bitcoin is a good indicator for the crypto market as it’s the biggest cryptocurrency by market capitalization and the market tends to follow its trends.
Bitcoin’s value was on a wild ride through 2021 and set a new record last November when it reached over $68,000. It crashed in 2022.
The crypto market and Bitcoin have been falling this year due to ongoing macroeconomic uncertainty. This has been mainly caused by rising inflation, a weak stock market, rising interest rate and fears of recession. Bitcoin lost more than two-thirds of its value between November and December and has fallen as low as $17,000. Experts are still divided on whether bitcoin has reached its bottom yet. While some say bitcoin has bottomed, others believe it could drop to $10,000 by 2022.
This volatility is why experts recommend that your crypto investments not exceed 5% of your portfolio.