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Key factors determining Bitcoin volatility

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Bitcoin is a decentralized peer-to-peer payment system known for its volatility. Cryptocurrency volatility is not alone


Bitcoin is a decentralized peer-to-peer payment system known for its volatility. Cryptocurrency volatility is not alone. In fact, it determines the direction of the cryptocurrency market. Most cryptocurrencies are affected by bitcoin price fluctuations. Understanding the factors that affect bitcoin volatility will help you better assess the evolution and trends of the cryptocurrency market. Some of the most important factors are:

As analysed in a research paper by Ladislav Kristiufek, “What Are the Main Drivers of Bitcoin Price,” published in 2015, attractiveness is a more dominant variable than supply and demand in determining the price of bitcoins. Attraction can be seen as something good. Reputation and attractiveness. Withdrawal of investments in bitcoins. This is largely determined by the influence of the media and political changes. Impact on the Media: The positive news published by the media about Bitcoin is critical to attracting potential investors and increasing Bitcoin's consumer base, especially as the number of altcoins increases. Changed: Political unrest and economic crises often lead to increased public acceptance of cryptocurrencies. People tend to rely entirely or heavily on cryptocurrencies for their non-banking transactions and future investment prospects. Afghanistan, Nigeria, Kenya, Vietnam and Argentina are some of the countries seeing a surge in cryptocurrency use.

To understand the bitcoin supply rate, it is important to remember that the total supply of bitcoins is limited and 90% of them have been extracted. Bitcoin price falls as stocks rise. Although the supply of bitcoins is limited, the supply in the market can be increased by extracting or uncovering complex algorithms, but demand has a greater influence on the price of bitcoin than supply, since bitcoin has a 21 million coins in advance. The price of bitcoin rises as demand rises as more investors compete to buy cryptocurrency. The demand for cryptocurrencies is likely to increase, so the price is expected to rise in the future despite these restrictions.

As Xin Li and Chong Alex Wang analysed in their 2017 research article Technical and Economic Factors of Cryptocurrency Exchange Rates, the difficulty of extracting bitcoins or hash rates is not directly related to the price of bitcoins, but has minimal impact. Increasing Investor Commissions for Removing Devices”. Hardware and electricity costs, which indirectly mean higher bitcoin prices. In the past, investor fears have negatively affected bitcoin prices. Bits in China in 2017 An example of this is the suppression of coins Sharply dropping the price of bitcoin.

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