The price of Bitcoin is determent by a number of factors, and they are not so different from the factors impacting FIAT currencies. We will go over those who have the most significant impact, but first, we will look shortly at some basic principles for determining value.
How money get its value?
Money gets its value because we give it value, it all started back when we were trading goods for other goods and needed something a little more practical than walking around with a pig under your arm to buy a new set of clothes. To avoid the hassle of dragging on a pig some smart people came up with the idea of using precious metal. They were valuable because there was a scarcity and people agreed on using it for payment. At some point, another group of smart people decided on making paper money possibly because walk around with large sums of precious metals did weigh too much. If you look at an old dollar bill, you will see that there is written on it that it is exchangeable to gold or silver, that made it an economy backed by gold and silver. That is not the case today where our modern economy is backed by debt. If you want a detailed explanation, you can see it in the video below.
Now that you have a basic understanding of currency and how it works you will also have an understanding that currencies only have value because we as a society choose to give it value. Theoretical if all people decide not to accept money as a medium of exchange, but instead we wanted to use beats then money would have zero value.
The value of cryptocurrencies
The price of cryptocurrencies is based on supply and demand, and there are longe articles about that subject but to sum it up for everyday use. The higher the available supply, the lower the price and the higher the demand is, the higher the price, and for selling a product it is all about finding the sweet spot where you get sold out your item and have nothing left. And to put it into the cryptocurrency market then every time we see a bear run (price taking a downward curve) it is because the price was too high in comparison to the available supply. When we see a bull run (price taking a curve up), it is because the available supply is not enough to meet demand. But there are some things that impact supply and the demand, and we will look closer on that
The available supply is not determined by what many coins are mined, but it does have an influence on how many coins can become available. So by knowing the current circulating supply, we do have an indication of what can be brought on to the market, this knowledge also gives us an indication of the scarcity of any coin.
If you thought social media had no influence over cryptocurrencies, you thought wrong because many people get their information from SoMe influencers. A single tweet from the right person might give a significant price drop on smaller coins, but for the coins with a high total dollar value such as Bitcoin and Ethereum, we will not see one tweet make a big impact. But we might see a dent in the market. The thing that worries me is if a large number of Crypto SoMe influencers band together they can bring down even Bitcoin to a low level. Currently, I see no reason for them to do so since Bitcoin is the backbone of cryptocurrencies.
The specialised media such as cointelegraph, bitcoin.com, CCN and others have the possibility of changing how the market ends up but only within in the established community and we have seen a tendency from such media outlets to run alone when the community instead of challenging it with facts. I will always recommend that you stay updated on cryptocurrencies through such media, but remember to think about what they write and why they do so.
Mainstream media have a hard time with shaking the established community, but they can move people to and from using bitcoin if they are not a part of the established community. When they move people in, we see some significant bull runs, but as they move people out, we see bear runs the best example of both effect is to look at the 4th quarter of 2017.
The development of technology does not use the same price impact as we have seen in the past, but it still has an effect on price when we see new technical developments in cryptocurrencies. Currently, we just use a structure where the talks in the community are focused on price and what coin is going to pop next. So when someone is announcing new developments, they need to reach out to SoMe influences to make sure the community hears it.
The development team
The team developing a coin has different ways to influence the price. They can reach out to SoMe influences for some publicity, besides that, they can run marketing campaigns to raise awareness of the coin the last option is for the team to be on Social media talking about their coin.
How can you stay informed
There are several ways to stay informed. First of all, follow what there are being talked about on Bitcoin.org and reddit.com. When you are on Reddit, there are several communities such as r/btc, r/cryptocurrencies, r/altcoin, r/blockchain and many more.
Besides forums, there are many people on tweeter to follow the best way to find the ones you like is when you find someone who speaks in a way you like then find them on Twitter and you can of cause follow us at Twitter by clicking here.
And then there is YouTube where you need to stay focused on getting more than one view, but I can recommend the ones I follow the most which are Boxmining, Ivan on Tech, DataDash, Kubera and there are many more. But be aware they all have a motive that might not be visible to you that’s why different opinions are essential to get.