.
.
.
Contents
Bitcoin's Value Debate: Beyond Skepticism
What Makes Bitcoin Valuable (Really): Supply and Demand
The effects of market sentiment on Bitcoin's price dynamics
Bitcoin’s macroeconomic role: Hedging, safe haven and market reflection
How do global regulations shape Bitcoin's price?
Bitcoin's price increase is due to increasing institutional and retail adoption
Bitcoin's price: More than speculation?
Subscriber
Join us to showcase the crypto revolution one newsletter at a time. Subscribe now to get daily news and market updates delivered straight to your inbox, along with millions of other subscribers (yes, millions love us!) — what are you waiting for?
Bitcoin's Value Debate: Beyond Skepticism
While critics such as Warren Buffett argue that Bitcoin has no intrinsic value, its growing role as a regulated asset points to deeper complexities.
Billionaire investor Warren Buffett has called Bitcoin "probably rat poison squared" and argued that it "produces nothing" and has "no intrinsic value."
After all, unlike traditional assets like gold, which can be used to make jewelry or electronics, or oil, which powers industry and transportation, Bitcoin ( BTC ) has no physical form or tangible use.
This lack of tangibility leads many to believe that Bitcoin’s value is based entirely on mutual agreement — a consensus among investors willing to buy and hold it. Such a view often fuels skepticism, with critics claiming that Bitcoin is nothing more than a Ponzi scheme in which its price depends on attracting new buyers. In this scenario, if belief in Bitcoin wanes, its value could eventually collapse.
But the truth is more complex. As Bitcoin becomes a regulated asset and, in some cases, a legal tender, its price is affected by a number of factors.
What Makes Bitcoin Valuable (Really): Supply and Demand
Bitcoin’s fixed supply is what makes it unique in the first place. There will only ever be 21 million BTC in existence, and by November 2024, more than 19.5 million had been mined. This built-in scarcity is why many consider Bitcoin to be “digital gold,” because when demand increases, prices go up but supply remains limited. Its basic economics: Less supply plus more demand equals higher value.
It’s also important to consider Bitcoin halvings, which tighten supply. For example, the April 2024 halving reduced mining rewards from 6.25 BTC per block to 3.125 BTC. These halvings occur every four years and limit the amount of new Bitcoin that enters circulation. Past halvings have triggered massive price increases, such as in 2020, when Bitcoin surged from $9,000 before the halving to over $60,000 a year later.
But in 2024, the impact was more gradual, with Bitcoin’s price rising from around $45,000 before winter to around $70,000 in May and $99,486.10 in late November. The dwindling supply line is still tightening the market, and analysts expect a delayed upward impact.
Indeed, demand isn’t just technical, it’s real-world. Several big players, including BlackRock, are launching spot Bitcoin exchange-traded funds (ETFs) in 2024, attracting institutional money and pushing Bitcoin further into the mainstream.
Retail investors using platforms like PayPal and Robinhood also excel during bull markets, especially when FOMO returns during price rallies. Meanwhile, traders amplify short-term moves with speculative bets, feeding into Bitcoin’s notorious volatility.
Bitcoin’s limited supply and increasing demand driven by institutions, retail users, and halvings keep supply and demand at the core of price dynamics.
Did you know? Unlike traditional financial systems, Bitcoin trading occurs across a network of exchanges and entities, including decentralized peer-to-peer platforms, rather than through a single centralized entity. This means that no single entity can manipulate withdrawals or halt transactions, making Bitcoin somewhat resistant to panic selling
The effects of market sentiment on Bitcoin's price dynamics
Bitcoin’s price is, naturally, often a reflection of market sentiment. Positive sentiment can send it soaring, while negative news can trigger steep declines. Unlike traditional markets where valuations are tightly tied to fundamentals, Bitcoin’s value is highly sensitive to perception and sentiment.
When institutional players step in, confidence increases. For example, BlackRock filed for a Bitcoin ETF in June 2023. Although it wouldn’t be approved until January 2024, the announcement alone caused a price spike, sending Bitcoin up over 20% in a matter of days. Similarly, when companies like PayPal or Square announce crypto integrations, it reinforces Bitcoin’s legitimacy, increasing demand and price.
Conversely, negative sentiment can have an equally dramatic effect, as when news of regulatory crackdowns emerge. China’s 2021 mining ban led to Bitcoin losing almost 50% of its value in just a few months.
Attacks and security breaches also undermine trust. After the Mt. Gox hack in 2014, where 850,000 BTC were stolen, the price of Bitcoin plummeted and took years to recover.
Public perception amplifies these effects. FOMO (fear of missing out) often drives bullish runs, while FUD (fear, uncertainty, and doubt) leads to panic selling during declines. Social media, online forums like Reddit, and influencer posts add fuel to these emotional cycles, creating a feedback loop that can rapidly escalate price movements.
So, you can’t ignore the fact that Bitcoin’s price is dependent on market sentiment and prices fluctuate wildly depending on the current market sentiment. However, it is not the only determinant of price.
Bitcoin’s macroeconomic role: Hedging, safe haven and market reflection
Bitcoin's price often responds to broader economic trends, acting as both a hedge and a speculative asset.
In times of instability, such as the ongoing financial crises in countries like Turkey and Argentina, Bitcoin’s decentralized nature offers a lifeline. For example, in Argentina, where annual inflation skyrocketed to 193% in October 2024, Bitcoin became a reliable way to store value as the local currency lost its purchasing power.
Similarly, geopolitical tensions have highlighted Bitcoin’s role as a financial safe haven. During the Russia-Ukraine conflict, Bitcoin allowed individuals to transfer wealth across borders despite sanctions and financial restrictions.
But Bitcoin doesn’t always operate independently of traditional markets. After the 2024 United States presidential election, Bitcoin rose alongside the S&P 500 as markets responded to the stability that came at the end of the election cycle and crypto investors celebrated Donald Trump’s crypto-friendly policies.
This parallel movement shows how Bitcoin’s price can reflect macroeconomic sentiment, how it can align with broader financial markets when conditions align. Undoubtedly, its ability to adapt to a variety of economic scenarios keeps it at the center of the global financial conversation.
How do global regulations shape Bitcoin's price?
Regulation also plays a major role in Bitcoin’s price by shaping investor confidence and influencing market behavior. Regulatory developments in 2024 had a significant impact and reflected different approaches across key regions.
Trump’s re-election to the White House in the United States brought a wave of optimism for the crypto industry. He promised to position the US as the “crypto capital of the planet” and even floated the idea of creating a national Bitcoin reserve. This pro-crypto stance has increased institutional and retail interest, helping Bitcoin reach new all-time highs in 2024.
On the other side of the Atlantic, the European Union has taken a more cautious stance. The introduction of the Markets in Crypto Assets (MiCA) regulation aims to comprehensively regulate digital assets, focusing on consumer protection and market stability.
While MiCA’s clarity is a step forward, its strict rules on compliance and reporting have made operating in the EU more challenging for crypto businesses. Several startups have slowed their expansion or focused on less regulated regions, softening Bitcoin’s momentum in European markets.
Elsewhere in Asia, however, are following their own regulatory path, with places like Hong Kong embracing crypto-friendly frameworks while others like India remain skeptical and uncertain about their policies.
Over time, regulations could provide a sense of authenticity and legitimacy within the broader financial system and elevate digital assets like Bitcoin to legal tender status, as seen in El Salvador in 2021. This would help bridge the gap between traditional and decentralized finance.
Additionally, as central bank digital currencies (CBDCs) gain prominence, regulation could play a key role in stabilizing price fluctuations by promoting trust and standardization in the market.
Did you know? As of 2024, more than 130 countries, representing more than 98% of global GDP, are exploring CBDCs. Among them, 11 countries have fully launched CBDCs, while others are in various stages of development or pilot programs.
Bitcoin's price increase is due to increasing institutional and retail adoption
The price of Bitcoin is closely tied to how widely it is adopted by both institutions and individuals. As adoption increases, its utility and demand also increases, which pushes prices up.
Institutional adoption has been a game-changer for Bitcoin. Companies like MicroStrategy, which owns over 330,000 BTC as of November 2024, are using Bitcoin as a reserve asset, citing it as a hedge against inflation.
Retail usage is another major driver. Bitcoin is increasingly used for everyday payments and cross-border remittances. For example, many remittance services in Latin America have adopted Bitcoin to reduce fees and processing times. In 2024, PayPal expanded its Bitcoin payments feature globally, making it easier for consumers to use Bitcoin for purchases, increasing transaction volume and adoption.
Technological advances have also expanded Bitcoin’s usability. The Lightning Network, a layer-2 solution, has enabled faster, cheaper transactions, making Bitcoin more practical for micropayments and everyday use. In 2024, major players like Square and Strike will continue to support Lightning integration, increasing Bitcoin’s scalability and appeal. These developments are lowering barriers for businesses and consumers, encouraging broader adoption.
Adoption at any level strengthens the network, increasing its value and Bitcoin's long-term price potential.
Did you know? Global cryptocurrency ownership is set to exceed 560 million in 2024, up 34% from the previous year.
Bitcoin's price: More than speculation?
Bitcoin’s price is affected by a range of factors, from supply dynamics to adoption to macroeconomic trends, which refutes the idea that it is merely speculative.
Bitcoin’s price is not as simple as Buffett claims. While many like him argue that it is nothing more than a speculative bubble, the reality is shaped by a number of factors.
From its limited supply to halving cycles, institutional adoption to macroeconomic trends, Bitcoin’s value is supported by a multitude of factors.
As it gains traction as a regulated asset and even legal tender in some cases, Bitcoin’s price is increasingly tied to real-world demand, innovation, and its role in a digital-first financial system.