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How is Bitcoin’s Price Determined?

02 Aug 2021 Developer News
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We often hear how Bitcoin continues to break records in value. Recently, it even managed to cross over $63,000 as it became more valuable than gold. What’s even better, is that the future potential of this cryptocurrency is massive as it will experience massive rises. We are going to talk about that later on.

Speaking of the Bitcoin price, we wanted to provide you with a few factors that influence its value. This is one of the things that many people are unfamiliar with because Bitcoin is subject to frequent changes. After all, it is a highly volatile cryptocurrency. Without any further ado, let’s dive into the details.

Supply and Demand

We are going to start this with the most impactful factor. Think of Bitcoin as a certain product. Each product has two curves – supply and demand. Supply represents the number of units that can be released into the network in a certain period, while demand represents the people who want a certain amount of that unit in the same period.

Here’s how the curve goes. If the supply is higher than the demand, then the price will be low. Vice versa, if the demand is higher than the supply, then the price will be high. The second scenario is what applies to Bitcoin. The demand for this cryptocurrency is much higher than the supply, which is why it manages to reach such high price levels. Just a reminder, Bitcoin's supply is limited to 21 million units, hence the rarer it becomes, the more valuable will it be.

Halving Events

You often hear stories of how traders are keen on accessing and registering at reputable trading sites such as the Bitcoin Profit app after halving events end. The reason why is that trading sites like the one we just mentioned can connect you with thousands of buyers from all over the world, thus help you sell your assets very fast.

But, if you are wondering why traders are keen on waiting for halving events to end, we are more than happy to explain. During halving events, the process of mining Bitcoins is drastically cut. That means that Bitcoins are scarcer, hence the supply shortens, while the demand remains the same, or becomes even bigger.

That is why halving events have a major influence on Bitcoin’s price in the upcoming period. Not only that, but history showed that one year after these events end, the value of this cryptocurrency sky-rockets.

Institutional Interest

Finally, the institutional interest from companies and governments around the world also plays a major part. Here’s how. The more accepted Bitcoin is, the more its infrastructure grows, hence becomes more stable. The more stable a cryptocurrency is, the more valuable it becomes. There are thousands of companies, including global brands that support Bitcoin payments.

Moreover, many governments have become lenient towards it. The USA, European Union, and Canada are among the countries that do not deem it as an outlaw. Not only that, but El Salvador recently legalized Bitcoin in its entirety, and thus, became the first country in the world to do so.

Future Potential

Lastly, we would like to talk about the future potential of this cryptocurrency. When it comes to the legal status of Bitcoin, it is hard to determine how will it be treated because too many factors come into play. But, one thing that can be predicted is its future price.

Experts believe that Bitcoin will rise to $100,000 in 2022. The trend will continue in the upcoming years and after the halving events in 2024 and 2028, Bitcoin is likely to reach $500,000 in 2030. Since 99% of all Bitcoins will be mined in 2032, the value of this cryptocurrency will start to sky0rocket and reach $1 million in 2037.

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