What is the principle of Bitcoin (BTC) rise and fall?
Bitcoin reached its current historical high of $73,777 in March this year, but it was still around $15,000 more than a year ago. It has nearly doubled five times in just over a year. Why does Bitcoin have such a large rise and fall?
First of all, we need to understand why Bitcoin rises. First of all, the supply of Bitcoin is limited, with only 21 million pieces. Currently, there are 19 million pieces in the world. In the past four years, the daily supply of Bitcoin is 900 pieces. Starting from April 2024, the daily supply of Bitcoin will be cut in half, with only 450 pieces per day.
Secondly, starting from January 2024, there are already 11 ETFs (Bitcoin stock funds) on the market, and the liquidity of the market has increased. As ordinary people, we are more likely to trade in the market. At the same time, we have the endorsement of many institutions, which increases our confidence in digital currency. , the demand becomes higher, and the price will naturally rise.
Bitcoin is the representative of decentralized asset class, and Bitcoin is the elder of digital currency, so many wealthy people will choose to put part of their assets in Bitcoin.
The price trend of Bitcoin is affected by many factors. In addition to market sentiment and technical trends, the heat of the global capital market, the participation of institutional investors, and the attitude of governments towards cryptocurrencies are all important factors. Its twists and turns undoubtedly reflect the uncertainty of the blockchain market, especially the cryptocurrency market.
In addition, mining dynamics are also an important variable in the current trend of Bitcoin, and investors need to pay close attention to changes in this field. The recovery or further shrinkage of computing power may have a significant impact on the medium- and short-term price trend of Bitcoin.
The rise and fall of Bitcoin is mainly affected by the following factors:
1. Market supply and demand
2. Market sentiment
3. Technological development
4. Macroeconomic environment
5. Hacker attacks and security issues
6. Behavior of large investors
These factors interact with each other and jointly determine the price trend of Bitcoin.
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