Simon Hopes Blog | Factors That Affect Bitcoin Price, Trade, and Profit | Talkmarkets

Factors That Affect Bitcoin Price, Trade, and Profit

Date: Sunday, May 6, 2018 3:02 PM EST

Just like the traditional exchanges, cryptocurrency exchanges provide investors and traders with opportunities to buy and sell digital assets from each other. For instance, when you buy and sell Bitcoin directly from an exchange, you gain improved liquidity based on your chosen touch price and you have access to multiple prices to choose from. However, digital currencies don’t have the same regulations as stock and other fiat currencies. The markets rely heavily on matching engines and servers.

What moves Bitcoin prices, trade, and profits?

In as much as Bitcoin’s volatility makes it an attractive opportunity to trade in, volatility makes it a risky market too. Cryptocurrency prices are known to shift suddenly, and significantly. The market operates 24/7 which means the shift can happen any time of night or day.

Bitcoin is a decentralized currency free from economic, political, and other factors that affect traditional currencies. However, there are other factors that could potentially have a sudden impact on Bitcoin or any other cryptocurrency’s price. It is important to have a good understanding of these factors to manage and navigate risks in your crypto trading investments.

  • Supply of Bitcoins

Bitcoin is mined through an intricate technological process. It is expected that by the year 2040, Bitcoin mining will have reached around 21 million. At present, the amount or supply of Bitcoins varies according to the rate at which they enter the market. The trading activities of investors holding Bitcoins also affect the digital currency’s supply. The more they hold on to their Bitcoins, the less the supply. As with any other commodity that follows the law of supply and demand, Bitcoin prices fluctuate depending on the amount of the cryptocurrency available on the market at a particular time or day.

  • Bitcoin Market Cap

Prices of Bitcoin and other major cryptocurrencies such as Ethereum, and Litecoin are also dependent on the value or perceived value of the digital assets on the market. The value and perceived value of a digital asset will influence traders to capitalize on a surging opportunity or short on a trending bubble. Value affects trading activities and prices.

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