What Makes Bitcoin Go Up in Value?
Since its creation, Bitcoin has been defying the odds and shocking investors with its meteoric rise. For many of those outside of the world of cryptocurrency, this may seem like a mystery as Bitcoin isn’t used as a mainstream currency in the U.S. yet. However, with its increase in global acceptance, the value of Bitcoin is continuing to go up and it has risen in demand across the world. As this article is being produced, Bitcoin’s global market cap is just under one hundred billion dollars. But what makes Bitcoin go up in value and is this something we’ll continue to see?
Understanding What Makes Bitcoin Go Up In Value
In the world of cryptocurrency, there are countless factors that can make Bitcoin go up in value. Many times, it’s difficult to predict exactly how much Bitcoin will be worth in the future. However, there are a few specific factors that can lead Bitcoin to go up in value that include:
Government Regulation of Cryptocurrency
Although Bitcoin was created to operate independently without any involvement in central institutions, its value can still be tied to government rules and regulations. Depending on regulations from financial institutions and how governments view the cryptocurrency, Bitcoin can rise and fall significantly. For example, if the U.S. government declares they will ban Bitcoin trading, Bitcoin’s value would fall drastically. At its start, Bitcoin saw relatively no regulations or oversight as governments grappled with how to classify and categorize the currency. Now, as Bitcoin and other cryptocurrencies have become more mainstream, investors have to closely watch how the government treats them.
Media and Trader Energy
Just like stocks and other assets, investors tend to buy and sell based on hype in the market. If you’re wondering what makes Bitcoin go up in value, hype and positive press can dramatically influence its price on a day-to-day basis. The more positive press that Bitcoin receives, the more users begin investing in and buying Bitcoin, causing its price to increase rapidly. Even news of individual investors buying Bitcoin has the potential to move the market. To keep up-to-date on Bitcoin’s value, it’s important to follow cryptocurrency news and updates to know when it’s the right time to sell or invest.
Political and Economic Crisis
During uncertain political and economic times, citizens of affected countries may begin to feel uncomfortable with their fiat currency and turn to Bitcoin as a way to keep their money safe or move it out of the country. Since there are no regulations on sending Bitcoin in and out of the country, whenever there is some kind of political or economic upheaval, Bitcoin appears to be the smarter choice when it comes to storing and moving assets. As of now, the U.S. dollar acts as one of the primary global reserve currencies, meaning that when a local currency tanks somewhere in the world, markets in that economy turn to the USD as a stable backup. However, as more and more individuals gain confidence in Bitcoin as a stable alternative, this anonymous, decentralized currency may soon be the world’s new financial backbone in unstable markets.
How is Bitcoin Used?
While Bitcoin continues to go up in value, the cost increase is mainly driven by speculation. Most users believe that Bitcoin’s price is going to continue to rise which has caused an increase in Bitcoin purchases. Since Bitcoin can be used as a way to store wealth outside of the reach of financial institutions, similar to how gold has been used, its value is continuing to go up. Bitcoin is not only easier to store, but it can also be transferred anywhere around the world with just the simple click of a button.
As Bitcoin’s value continues to rise, it’s always smart to check its fluctuations by reading up on cryptocurrency news. Bitcoin has the advantage of making currency easy to access and share. The more that Bitcoin goes up in value, the more it will be seen as a mainstream way of buying and selling goods and services in the US.