We are seeing the dollar price fluctuate at a very constant rate, because the government controls the value. When you compare the value of a currency with different countries, it will show little change in the currency. It also depends on the economic growth of the country, but what about the fluctuations in the price of Bitcoin where it is not controlled by an owner or manager? So Bitcoin storm Can discern why the price of bitcoin fluctuates so much in this digital world?
The purpose of bitcoin
You all know about the story of paper currency. If you haven’t, I’ll explain it briefly here. People had a lot of trouble exchanging things and services before paper currency was invented. However, when fiat currency appeared, everyone could measure the value of every product and service. There was also a need for an institution or government to decide the value of a single piece of paper. But one person realized that this currency has a lot of problems such as high transaction cost, low processing speed, transfer fees, no global usage and control of other people, then think about the currency that can solve all these problems, it is also known as Bitcoin now . Bitcoin does not have a controller that determines the price, but people or Bitcoin users will decide the price according to their transactions.
The role of supply and demand in Bitcoin
You know that a country’s central bank controls the value of fiat currency by restricting the supply and increasing the supply of fiat currency. 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. That is not possible. When people receive positive or good news about Bitcoin, they start buying, the value starts to rise, and when they receive bad news, the price starts to fall due to the rapid selling. So the supply of this currency is limited, and the demand greatly affects the growth or decline.
Bitcoin trading affects too
Bitcoin trading has become popular these days because people are finding new ways to earn money in a short period. There is nothing better than Bitcoin to make money online in a short period of time using the right trading skills and experience. Bitcoin trading means buying bitcoin with some bullish prediction at some point, so that after the price goes up, they can sell and make a profit. But it is risky and volatile, and some large investors simultaneously invest huge money in bitcoin, which gives excellent high prices. People also spend more and more money to make a profit. However, the value begins to fall when they pull back the price with a profit.
Popular media influence a lot.
People’s decisions now depend on media channels like Instagram, Facebook, YouTube, Twitter, Google Research, etc. Viral videos or crypto influencers 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 about cryptocurrencies affect a lot, whether they are wrong or good.
In India, there was news about the ban of bitcoins, and for fear of the ban on bitcoin, people started selling and withdrawing their money from this currency, and the price of bitcoins started to fall. However, Bitcoin is not banned in India but has been restricted by the government for specific reasons.
Belief systems fluctuate, too.
Everyone has a different view of Bitcoin according to their knowledge and experience and makes decisions according to their knowledge. According to their knowledge, many people will say that you are good about cryptocurrency bitcoin, and some will say that you are wrong about it because they have read, heard or realized that it will make you poor because it is risky. If you start to believe it, you will start buying or investing in bitcoin, and the more people believe, the more valuable the bitcoin. But if there is doubt in the mind of existing bitcoin buyers, they will start selling out of fear that it will drive prices down.