Bitcoin is volatile in nature and subject to change,prices of bitcoins therefore are not static but dynamic.
As a good blockchain merchant,you have to know everything about trading bitcoins,among the A-Z of trading bitcoins are the factors that affects the fluctuation of bitcoin.
The factors affecting the fluctuation of bitcoin are listed below and they are:-
(1) DEMAND AND SUPPLY:
Demand may be defined as the amount or quantity of goods and services which a consumer is willing to buy coupled with the financial ability to pay at a given price at a particular time.
Supply on the other hand may be defined as the quantity of a given commodity or service which a producer offers for sale over a given period of time at a particular price.
The law of demand states that other things being equal,the higher the price,the lower the quantity demanded, and the lower the price,the higher the quantity demanded.
The law of supply states that other things being equal, the higher the price,the higher the quantity supplied,and the lower the price,the lower the quantity supplied.
This forces and principles also affects the fluctuation of Bitcoin Prices.
For bitcoin to be mined and supplied,bitcoin miners mine by solving a complex mathematical equation.
When miners successfully solve this puzzle,they earn bitcoins.
The demand aspect of bitcoin is affected as the more people want bitcoin,the more the price of a coin increases.
The more media coverage bitcoin gets,the more people become aware of it and may invest in it.
Good or positive media coverage causes price increase,while negative or poor media coverage results in price reduction.
Also,when companies decide to take bitcoin as a method of payment,awareness tends to rise and investments and prices tends to spike.
(3)ECONOMIC AND POLITICAL CRISIS:
When people are not sure of a country’s economy,people put their trust in crypto currencies, due to the fact that it is not controlled by any government.
Due to many people investments and trading of crypto currencies,the price tends to increase.
(4)AFFIRMATION BY NATIONS:
The Japanese and Australian government have recognized bitcoin as a legal tender,this made the demand for the currency to rise.
Many Japanese and Australians have therefore being engaged in bitcoin trading and thereby increasing the price of bitcoin at that particular time.
There are lots of activities that require bitcoin to operate.
The likes of ponzi schemes and MLM schemes are examples.
When international government crack down on such activities,then the price of the currency falls or rises.
These five points outlined above are the major causes of bitcoin fluctuaction which every good blockchain merchant should know,tehlex has brought this to you for a better trading experience,why not go to https://www.tehlex.com and trade with your newly acquired knowledge.