The Bitcoin value has fluctuated significantly over the past few years. This is largely due to government policies. For instance, the value of Bitcoin decreased dramatically in the first half of 2017. In December of that year, it was only worth $24,000. However, by December 2020, it had risen by 224%. It is now worth a total of more than $100k.
However, this volatility is temporary, as more businesses and individuals become aware of this digital currency. As a result, many investors are buying and holding Bitcoin. They believe that the currency will mature and gain more trust, resulting in a greater bitcoin value. In addition, they are interested in adopting a new, decentralized currency, one that is unfettered by regular banks and governing authorities.
Bitcoin’s price fluctuates widely, based on demand and supply. More buyers than sellers can push the price higher, and vice versa. This behavior is similar to what occurs in the stock market and most open marketplaces. If the price falls below the level of support, it will begin a downward trend. However, if there are more sellers than buyers, it will decrease in price.
Bitcoin’s value is measured in terms of its market price, which is determined by the latest exchange prices. However, it is important to note that the value is not the same as the intrinsic value, which is determined by a complex analysis. As a result, there is no universally accepted definition of what the value of Bitcoin is. As a result, the value of Bitcoin depends on each investor’s perspective. Many believe that the intrinsic value of Bitcoin is higher than its market value.
Bitcoin has many similarities with precious metals. They both have a decentralized nature and derive their value from scarcity. Unlike fiat money, however, Bitcoin is a programmable digital currency. It can be transferred easily through the internet and is not backed by any government or country. As a result, its value will always remain somewhat volatile until the digital currency is widely adopted.
Regulation is needed to create a more stable environment for cryptocurrency trading. With the help of ETFs and futures contracts, investors will have more options to trade the cryptocurrency. Furthermore, regulation may even allow investors to bet against the price of cryptocurrency and take short positions. Both of these factors could decrease volatility and negatively impact demand for the cryptocurrency.
