Many of us agree that the creation of Bitcoin is a big turning point in the history of cryptocurrency. But then, its sudden price swings is usually a thing to worry about. After reaching a peak of more than 60 thousand dollars in April 2021, Bitcoin fell below 30 thousand dollars by the end of July 2021. This wasn’t such a big surprise as we all have come to associate cryptos with volatility. For instance, shortly after we witnessed a dip in Bitcoin value in July 2021, it came out much stronger in the next few months, breaking all previous records, and reaching over 67 thousand dollars in early November 2021.
We also saw that the price of Bitcoin reached an all-time high of about 73 thousand dollars in March 2024. This price increase was linked to the US government’s acceptance of Bitcoin ETFs. Earlier price increases in 2021 were brought on by events involving Coinbase and Tesla, respectively. Take, for instance, Tesla’s statement in 2021 that it had bought 1.5 billion dollars worth of Bitcoin. So if you’re a new crypto investor, we suggest you keep tabs on the recent market trends and also use bestcryptowallet.com to secure your cryptos.
Market Trends Of Bitcoin In 2024
The protracted battle for Bitcoin Spot ETFs ended in January 2024, all thanks to the court that ordered the SEC to reconsider its rejection of many financial products related to Bitcoin. Crypto enthusiasts observed that some brokerages flooded the market with new holdings, while others like Grayscale’s Bitcoin Trust (GBTC) immediately experienced large outflows. It was also observed that as March approached, withdrawals from certain funds decreased, thereby stabilizing the market. There were probably more options available to investors immediately, which caused a rebalancing of the market. After the fund approvals, the price of bitcoin surged rapidly; it again broke above 60 thousand dollars mark in late February. By early March, Bitcoin broke all previous milestones, as it hit approximately 73 thousand dollars on Coinbase.
As we entered the end of the first quarter of 2024, we witnessed not only a dip in the value of Bitcoin but also the fourth and most recent halving event of Bitcoin. This event occurred on April 19, 2024, and it lowered the reward for a mined block from 6.25 BTC to 3.25 BTC. Nevertheless, the market showed a positive response, as expected, with increases seen in all of the main indices. Additionally, Bitcoin continued “mimicking” the stock market trends. On September 19th, 2024, it traded at roughly 64 thousand dollars, which was a significant jump from its price of roughly 60 thousand dollars just two days earlier.
6 Factors That Causes Bitcoin To Rise And Fall
Bitcoin is well-known for its volatility and instability. This is because we have seen over the course of the last 10 years how the price of Bitcoin can fluctuate sharply, frequently causing panic among investors. So what precisely is causing Bitcoin to fluctuate so much? Let’s us examine the main factors that cause the rise and fall of Bitcoin’s price:
Market Sentiment
Whether you agree or not, research shows that the market sentiments can have a big impact on how much Bitcoin fluctuates in price. When the media reports positive news such as advancements in the cryptocurrency market, the confidence of investors would be boosted. This can raise the price of Bitcoin. Negative news(like security breaches or regulatory crackdowns) like we’ve seen in the past, can frighten investors and cause a sell-off, which lowers prices.
Regulatory Environment
This one factor that even a newbie in crypto knows will significantly affect Bitcoin’s price. The regulatory environment can cause fluctuations in Bitcoin value due to market uncertainty brought on by news of prospective laws or bans of cryptocurrency in particular nations. On the other hand, favorable developments like the approval of Bitcoin exchange-traded funds (ETFs) and regulatory clarity may have a beneficial impact on the price of Bitcoin.
Market Speculation
A major factor contributing to Bitcoin’s price volatility is market speculation. You buy and sell Bitcoin in the highly speculative cryptocurrency market based on market trends and price forecasts. Because of this speculative trading, the price of Bitcoin may change quickly in any direction, with unpredictable rises and falls.
Supply And Demand
Supply and demand are two main elements that affect the price of Bitcoin. Like any other asset, the price at which people are ready to purchase and sell Bitcoin determines its value. Price increases are common for Bitcoin when demand is strong and supply is constrained. On the other hand, prices decrease when there is a surplus of supply and little demand.
Technological Advances
There’s no reason not to believe that technological developments in the blockchain and cryptocurrency space is big factor that affects the rise and fall of Bitcoin. Positive changes in the price of Bitcoin can be as a result of possible outcomes of network upgrades to the cryptocurrency, such as the introduction of the Lightning Network to enable quicker and less expensive transactions. On the other hand, scalability challenges or security flaws may negatively affect the price.
Market Manipulation
Market manipulation is another big factor that’s behind the fluctuations in Bitcoin price. The Crypto market is not under strict regulations and as a result people or groups of people that have a large amount of Bitcoin can manipulate the market to their favor by either buying or selling large quantities of these digital coins. These groups of manipulators that employ manipulative tactics to cause artificial movements in the price of Bitcoin are known as Whales.
We’ve analyzed past and present events that cause quick changes in Bitcoin prices. So we concluded that you should expect the rise and fall of Bitcoin to continue as long as there’s demand for Bitcoin as an investment asset. This post showed you how Bitcoin fluctuations are influenced by factors such as supply and demand, market sentiment, and regulatory environment. Other factors that you’ll find to influence the Bitcoin value include; market manipulation, technological advances, and market speculation. If you understand these factors, then you’ll be able to make informed decisions when buying or selling Bitcoin. Finally, Since the launch of Bitcoin in 2009, you’ll agree that the coin has remained a popular asset. But then it continues to demonstrate high volatility and instability!
