We see the price of dollars fluctuate at a very fixed rate, and that’s because the government controls the value. When you compare the value of a currency with different countries, it will show a minor currency change. It also depends on the economic growth of the country, but what about bitcoin price fluctuations when no owner or manager controls it? So bitcoin storm can distinguish why the price of bitcoin fluctuates so much in this digital world?
The purpose of bitcoin
You all know the history of fiat money; if you don’t, I’ll briefly explain it here. People faced so much difficulty in exchanging things and services before the invention of fiat money. Yet when fiat currency arrived, everyone could measure the value of every product and service. It also needed an institute or a government that decides the value of a single paper ticket. But one person who realized that this currency has many problems such as high transaction costs, low processing speed, conversion fees, non-global usage and controlling other people then thought of the currency that could solve all these problems, and it’s known as bitcoin now. Bitcoin does not have a controller who will set the price, but people or bitcoin users will decide the price based on their transactions.
The Role of Demand and Supply in Bitcoin
You know that the central bank of the country controls the value of paper money by limiting the supply and increasing the supply of paper money. But the demand and supply of bitcoin depends on the belief system of bitcoin users, and when all bitcoin users start selling bitcoin, the value of this currency will become zero. It is not possible. When people get positive or good news about bitcoin, they start buying and the value starts going up, and when they get bad news, the price starts going down due to the fast selling. The supply of this currency is therefore limited and the demand greatly affects the growth or decline.
Bitcoin trading also has effects
Bitcoin trading is becoming popular these days because people are finding new ways to make money in a short time. There is nothing better than bitcoin to make money online in a short time using the right trading skills and experience. Trading bitcoin means buying the bitcoin with a forecast of increase in some time so that after increasing the price they can sell and make a profit. But it’s risky and volatile, and some big investors are simultaneously investing huge amounts of money in bitcoin, resulting in excellent high prices. People are also spending more and more money to make a profit. Yet the value begins to fall when they withdraw the price with a profit.
Trending media influences a lot.
Now, people’s decisions solely depend on media channels such as Instagram, Facebook, YouTube, Twitter, Google search, etc. These viral videos or influencers in cryptocurrency force their followers to make an instant decision by creating FOMO (fear of missing out). According to the news they hear or read, people start buying or selling bitcoin. These viral videos around cryptocurrency are influencing many whether they are fake or good.
In India, word got out that bitcoin would be banned, and out of fear of banning bitcoin, people started selling and withdrawing their money from this currency, and the price of bitcoins started falling. However, Bitcoin has not been banned in India but is restricted by the government for specific reasons.
Belief systems also fluctuate.
Everyone has a different perspective on bitcoin based on their knowledge and experience and makes decisions based on their knowledge. According to their knowledge, many people will say that you are good at bitcoin cryptocurrency, and some will say that you are wrong because they have read, heard or realized that it will make you poor because it is so risky. If you start believing in it, you will start buying or investing in bitcoin, and the more people believe in it, the more the value of bitcoin will increase. But if there is any doubt in the minds of existing bitcoin buyers, they will start selling lest it create a situation of lower prices.