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Attention to the factors affecting the price of Bitcoin has increased greatly these days. With the expansion of blockchain technology and the development of profitability in the cryptocurrency market, most people became interested in news affecting digital currency and investing in them. Some traders have been trying to predict the price of Bitcoin in 2023 and the future; so that they can determine the direction of their transactions and investments to enter the Bitcoin market.
Therefore, considering the impact of Bitcoin on other digital currencies and the price of each Bitcoin in 1402, the price prediction of this currency and other cryptocurrencies is very important. In 2020, the fundamental factors affecting the price of Bitcoin at that time were the Corona epidemic, Hoving Bitcoin, etc. At that time, it was not recommended to enter the market due to these issues.
In the rest of this article, we will examine the factors affecting the price of Bitcoin and the reason for the growth of Bitcoin today.
A look at Bitcoin trends in 2020
In 2020, when the spread of the Corona virus spread, all global markets were under the shadow of this factor. At that time, it was predicted that if the disease can be controlled until the end of June, there will not be much loss in the market and Bitcoin will also have good resistance. But if this virus cannot be controlled and its spread increases, there should be a re-analysis of cryptocurrencies and their resistance against this common enemy of the people should be checked.
Therefore, any entry into the market at that time was done with caution and moderate buying signals were observed. In those circumstances, the corona disease was one of the news affecting the digital currency and it was recommended that the fundamental factors and especially the impact of the corona virus on the global economy should be taken into consideration and the entry into the market should not be done too recklessly.
Fundamental factors affecting the price of Bitcoin in 2020
In fact, the issue of Corona was one of the fundamental factors affecting the price of Bitcoin and other cryptocurrencies. In 2020, Corona caused the price of Bitcoin to fall. Another important fundamental factor in Bitcoin was the Bitcoin Hoving in May 2020, which helped to increase the price of Bitcoin.
One of the other promising fundamental factors of Bitcoin was that Bitcoin was able to recover after falling below 4,000 dollars and rise to 7,000 dollars.
This issue is not considered a positive point in the case of bank stocks and currencies that have government backing. But according to the opinion of experts about the future of Bitcoin, there was a positive point about this currency due to the lack of government and institutional support, which promised that these cryptocurrencies are resistant even in difficult market conditions. Considering the fundamental conditions and the corona virus, which had a great impact on the economic conditions of individuals and countries, it was not recommended to enter the market at that time.
Bitcoin price fluctuations
Bitcoin price prediction in 2023 and the future, like other digital currencies, is always one of the attractive topics in the cryptocurrency market. To the extent that the following questions have been searched the most in search engines:
- The reason for the growth of Bitcoin today
- The impact of Bitcoin on other digital currencies
- Experts' opinion on the future of Bitcoin
- Bitcoin price prediction in 2024
- The price of each bitcoin in 1402
- The impact of the dollar price on Bitcoin
- News affecting digital currency
- Bitcoin news today
Bitcoin digital currency is introduced as the mother of cryptocurrencies and is one of the most popular digital currencies in the world. Buying Bitcoin is not the same as buying bonds and stocks, and there is no specific form or common partnership document to review. Hence, there is no fixed profit, price or yield for Bitcoin. This cryptocurrency is not the same as traditional currencies because the government or the central bank does not supervise the process of its creation and use.
Therefore, financial policies, economic growth tools and inflation rates, which usually affect the exchange rate, will not have an effect on Bitcoin. This factor has caused the price of Bitcoin to rise and fall.
In general, it can be said that the price of Bitcoin is not determined by individuals, rather the market situation determines the price of Bitcoin.
Since 2009, when the first Bitcoin was created, the price of Bitcoin has experienced extreme fluctuations. These fluctuations have provided a good opportunity for the traders of this market to earn profits. Analysts can analyze and predict the price of Bitcoin based on the news affecting the digital currency, today’s Bitcoin news and technical analysis and fundamental analysis.
Factors affecting the price of Bitcoin and other cryptocurrencies
As mentioned above, several factors affect the price of Bitcoin. In the following, we will mention the fundamental factors affecting the price of Bitcoin:
Bitcoin supply and demand system
In other words, the price of Bitcoin is affected by its acceptance as a type of asset among people. In fact, supply and demand is one of the factors affecting the price of this digital currency. If the demand for Bitcoin increases, the price of this cryptocurrency will increase. For example, if the number of buyers increases, the price of digital currency Bitcoin will also increase.
The value of precious metals such as gold is also due to its limited supply. Usually, the price control of these metals is done by the supply and demand system. This system is a simple economic factor that is considered among the news affecting digital currency.
Whenever there is an increase in demand for buying cryptocurrency in the digital currency market, the price of that cryptocurrency will increase. On the contrary, if the supply exceeds the demand, you will see a decrease in the price.
The demand for various parameters such as important economic and political events such as the US-China war, the revolution, changes in the laws of countries, the spread of diseases such as Covid-19, which they mentioned about its impact, etc. It will depend.
Bitcoin supply
Bitcoin supply is done in two different ways. In the first type, the Bitcoin protocol allows the production of new Bitcoins with a fixed interest rate. New bitcoins are entered by checking transaction blocks by miners (extractors) and the rate of new coin entry decreases over time. In this situation, the demand rate for Bitcoin exceeds the supply and the price goes up.
The second supply method is based on the number of bitcoins that the system can have. This number of bitcoins is locked at 21 million and when it reaches this number, mining activities to produce new bitcoins will no longer be done. Here mining is supported by transaction fees. Bitcoin supply reached 16.8 million at the end of January 2017, indicating that 80% of the supply was completed. With a supply of 21 million bitcoins, prices will no longer depend on its utility, legality, and demand.
The cost of extraction
The cost of providing mining equipment is one of the factors affecting the price of Bitcoin. Although a digital currency is considered as a digital asset, it is still a product that needs to be produced. The main cost of Bitcoin mining is calculated based on the cost of electricity consumed in the mining process. In the mining process, miners solve encrypted and complex mathematical problems and receive bitcoins as a reward. A miner is a device that solves encrypted problems with high processing power during the mining process and consumes a lot of electricity. This process affects the price of Bitcoin.
Based on the Bitcoin algorithm, it takes 10 minutes on average to check a block and confirm its transactions. Therefore, every 10 minutes, a new block will be mined from Bitcoin. But if the number of miners increases, the competition between them will increase, and therefore solving the block math problems will be more difficult, and the time to mine Bitcoin will be more than 10 minutes. Finally, with the difficulty of solving problems and the need to maintain a 10-minute interval, the cost of extraction increases.
The impact of halving on the price of Bitcoin
Bitcoin halving happens every 4 years to control the supply and demand system. In fact, during the halving process, the reward for mining some cryptocurrencies is halved. In 2009, when the first Bitcoin was mined, the mining reward was equal to 50 Bitcoins. The first halving happened in 2012, which was a mining reward of 25 bitcoins. The second halving happened in 2016 with a reward of 12.5 bitcoins, and the third halving happened in 2020 with a mining reward of 6.25 bitcoins. Currently, according to today’s bitcoin news, the reward for 10-minute mining with high-powered machines is 6.25 bitcoins.
Halving increases the price of Bitcoin and other cryptocurrencies. This is due to the decreasing supply of Bitcoin. Because the halving of the miner’s reward will reduce their activity temporarily. Of course, it should be noted that there is no certainty about the decrease or increase in the price of Bitcoin during the halving phenomenon.
The usefulness and application of digital currency
Another effective and influential factor on digital currency is its usefulness. If you do not have the possibility to use a currency for a specific task, for example, if you do not make payments and investments with it, that currency will have no value.
For example, the usefulness of Ethereum digital currency is due to the smart contract platform. This is the reason for the relatively high price of Ethereum compared to other digital currencies. Also, the more the number of cryptocurrency projects with wider application increases, the faster their general acceptance and demand will increase. Bitcoin digital currency and other encrypted and decentralized cryptocurrencies are widely used in the future digital world and metaverse spaces, and on the blockchain platform.
Media activity and social factors
Another factor affecting the price of each bitcoin in 1402 and other currencies in the coming years is social factors. In fact, social factors target investors’ emotions. In this case, any comments made by the country’s officials and famous people regarding digital currencies can cause doubts among investors. Or even encourage them to bring more of their assets to the market.
The fear of losing capital (Fear Of Missing Out) and losing the chance of profit makes investors not buy and sell digital currencies through emotional decisions. This issue is also similar to what happened to cryptocurrencies during the corona virus epidemic.
Fear and panic in the world due to the emergence of the corona disease, caused users to sell their assets and during that the price of cryptocurrencies fell sharply. Some analysts and experts in the field of digital currency consider these doubts and fears to be a natural problem in the short term. In any case, you should avoid making emotional and emotional decisions in the cryptocurrency market.
Rumors and news affecting digital currency
As you know, every day we see rumors and news affecting digital currency. These news are sometimes in line with the support of cryptocurrencies and sometimes in order to create doubts among people about cryptocurrency. For example, the status of the MTGOX exchange and the news of its hacking were among the factors that caused the price of Bitcoin to fall over time. In another example, when Tesla introduced Bitcoin as one of the company’s payment methods, the price of Bitcoin increased.
Also, the news of accepting Bitcoin in countries as the official currency of a country and payment method was a positive fluctuation for the price of Bitcoin. On the contrary, the publication of the news of non-acceptance of Bitcoin in a certain country and the creation of taxes and restrictions on digital currencies also caused a decrease in demand and, as a result, a decrease in the price of Bitcoin.
Legal restrictions and issues
Legal and governmental issues are also another factor affecting the price of Bitcoin. If a government is strict in tax and property laws, one of the common measures is to hide assets using digital currencies, which causes a change in the price of Bitcoin and other currencies due to the increase in demand.
Positive legal measures, such as formalizing currencies as the currency of a country, have positive effects on the price of digital currencies. This is while banning cryptocurrencies by a country will have negative effects.
For example, the initial offering (ICO) was banned in China in September 2017 (September 2016), and this caused a significant decrease in the price of digital currencies. Of course, with the renewed support of digital currencies and blockchain by China, the prices underwent positive changes.
General admission
One of the upcoming challenges in the cryptocurrency market is the acceptance of digital currencies by the general public, governments, banks and large companies. Due to the emergence of blockchain technology and the fact that digital currencies are unknown to the majority of people, many people are cautious about investing in this area. Undoubtedly, with the increase in people’s trust in cryptocurrencies and the increase in public understanding of this technology, we will face an increase in the price of digital currencies.
Multiple forks
Fork is one of the methods of making changes in the blockchain and updating it. In fact, a fork is a branch of the main blockchain that is created by making changes to the source code of a project. Forks happen for many reasons, such as the need to add new functionality, resolve disagreements among members of a community over general policies, and fix security issues.
Due to the regular branches of the digital currency chain and numerous forks and the production of various types of derivative digital currency, critics of this market claim that cryptocurrencies are not limited and do not take the issue of currency scarcity seriously.
For example, on March 6-11, 2013, an unexpected fork occurred for Bitcoin, and the price of Bitcoin decreased by 25% during that time. On June 11-16, 2017, with the creation of the Bitcoin Cash fork, the price of Bitcoin decreased by 36%.
Market volatility and whales
Another important factor in the price of digital currencies are people who have a large amount of capital in the cryptocurrency market. These people are referred to as whales or whales, who are the biggest players in currencies. These people in the cryptocurrency market are like major shareholders in the stock market. Some of the most famous whales in the digital currency market are Satoshi Nakamoto (the creator of Bitcoin), Roger Ware, and the Winklevoss twins, who own a large portion of Bitcoin. Some whales tend to keep their bitcoins and others buy and sell them. Whether these people hold or sell bitcoins, they are influential in the digital currency market.
Imagine one person or a group of whales selling a large portion of Ethereum. This causes a downward trend in the market and a drop in prices. Because the general public will think that a huge amount of capital is leaving the network, thus creating doubts. On the other hand, if the whales do not sell and keep their Ethereum, due to the decrease in the total number of Ethereum available for purchase, the market will be under pressure and its price will increase.
Turnover
One of the important factors at the time of trading that professional traders pay attention to is the trading volume. Because this factor is a good indicator of the future trend of financial markets. Because we are facing an increase in the volume of transactions in the market, the price of digital currencies will increase compared to before. On the contrary, when the volume of transactions decreases, the price of cryptocurrencies will have a downward trend.
Of course, the noteworthy point is that you must check the recent changes in the volume of transactions and the news of Bitcoin today. And changes in the volume of transactions in previous years will not be a suitable measure for predicting the price of Bitcoin in the coming years.
Bitcoin transaction confirmation fees
One of the factors affecting the price of Bitcoin is the fee that miners receive in order to confirm the transaction at the time of transactions in the block. In general, transactions in the cryptocurrency market are free and no commission will be charged for this purpose. But if a person is in a hurry to wait in line for transaction approval, by paying a fee to miners, he can increase the speed of transaction approval.
Normally, the miner’s fee is almost equal to 2%. But as the volume of approved exchange increases, the fee will also increase. Therefore, with the increase of the fee, the costs go up, and as a result, the price of Bitcoin also goes up.
Competition between Bitcoin and other cryptocurrencies
Bitcoin is the mother of digital currencies and the most well-known digital currency in the world market. Although Bitcoin is still the first investment choice; Other digital currencies such as Tether, Ethereum, Binance, Cardano and Dataz were introduced in March 2021 as the closest competitors of Bitcoin and are trying to attract the attention of investors. The price of Bitcoin is more or less stable due to high diversity and wide competition in the market.
This is while if Bitcoin was the only digital currency in the market, its price would be different and maybe even lower than its current value.
Exchanges of digital currencies in different exchanges
It may have happened to users that they encountered different prices by searching for the price of Bitcoin on the Internet. For example, the price of Bitcoin on June 1, 2020 at the Coindesk.com exchange was $9,710,72.1. This is while on the same date on Winkdex.com Bitcoin was traded at the price of 9402.79 dollars. Therefore, it can be said that one of the factors affecting the price of Bitcoin and the reason for its price difference in many sites is that this currency is traded in different exchanges instead of trading in a specific place; Each of them independently and based on the transactions, have started pricing.
Indices calculate average prices across multiple exchanges by aggregating prices from multiple exchanges. But due to not using the same exchanges to achieve the average price of Bitcoin, the average obtained will not be the same. Therefore, the price of this currency is always changing depending on which exchange the obtained information is related to. Also, in different digital currency trading platforms, exchange with dollars and exchange with other digital currencies is done. With the expansion and increase of liquidity in these platforms, the price of Bitcoin also increases.
How to make a transaction by examining the factors affecting the price of Bitcoin
One of the common wishes of traders is to be able to increase their profitability by predicting market changes. Activity in the financial markets is a game of possibilities in which no certainty can be found. According to my analysis, you can do a more detailed and accurate analysis based on the review of important factors in the price of Bitcoin. And in different positions, analyze the reason for the growth of Bitcoin today or its decrease, and in this way increase the efficiency of your transactions.
Remember, in order to remain active in the cryptocurrency market, you must increase your experience, knowledge and skills in the field of trading over time and always be up-to-date with the news affecting digital currency and Bitcoin news today. Also, with the opinion of experts about the future of Bitcoin and awareness of its fundamental news, you can predict the market trend to some extent. Also, by using the science of technical analysis and using analytical tools such as indicators and Elview software, determine the best entry and exit positions for yourself, the levels of resistance, support and concepts related to price action.
The impact of Bitcoin on other digital currencies
So far, we have examined the factors affecting the price of Bitcoin. Now we will discuss the impact of Bitcoin on other digital currencies. Bitcoin is known as the first cryptocurrency and the king of digital currencies, and the price changes of other cryptocurrencies often follow the price changes of Bitcoin. In other words, the price of altcoins changes along with the price of Bitcoin. But the rate of change of altcoins will always be higher than the rate of change of Bitcoin price. For example, with the increase in the price of Bitcoin, the price of altcoins has increased, but the percentage of its increase is higher than the percentage of the increase in the price of Bitcoin, and vice versa.
In general, none of the above factors can be selected as the most important factor. In some cases, severe price fluctuations may occur due to the occurrence of several factors at the same time. Therefore, a professional trader should only act based on his trading strategies and not succumb to the emotions of the market. But in other words, it can be said that the supply and demand factors have a greater impact on the price of digital currencies.
Bitcoin and other digital currencies are responsible for financial transactions on the blockchain. With the increasing use of blockchain in various matters, the use of these cryptocurrencies as a payment method in this environment increases. Therefore, due to the increase in demand and the decrease in the supply of Bitcoin, the price of this currency is increasing and it is popular among investors and consumers due to its high profitability and ability to reduce inflation.
The value of Bitcoin will depend in part on the amount of supply and demand, its availability, alternative digital currencies and the amount of miner rewards.
Bitcoin has experienced severe fluctuations in recent years; But it is still introduced as the king of digital currencies. Before any action, you should be fully aware of your goals and conditions and invest according to the experts’ opinion about the future of Bitcoin and Bitcoin news today.
Considering that digital currencies do not have a physical nature and are not under the supervision, production and control of any institution or government; Economic factors will not have any effect on their price.
Due to the fact that Bitcoin, like gold, is more often introduced as a store of value, it has the opposite relationship with the dollar. Thus, with the increase in the value of the dollar, the price of Bitcoin will decrease and vice versa.
