• Sun. Sep 25th, 2022

Does the recent rise in bitcoin mean it’s back?

ByWikafever

Aug 4, 2022 ,
Source: https://latinamericanpost.com/27574-bitcoin-did-it-really-rise-or-is-it-just-another-illusion

There is a popular maxim that “we rise by lifting others”. I think this maxim applies to the recent rise seen by bitcoin on the 30th of July, putting bitcoin at 3.36% ($24, 584.24) as against the June 18 hit which put the currency at $17,592.78. Ether which is linked to the Ethereum blockchain also got a pat on the back as it rose 0.61%, adding to its network, $10.46 to its previous close.

Bitcoin made a public appearance in 2009, began its rise in popularity in 2010 and since then its price has sometimes risen and declined by thousands of dollars within days. However, the prominent crypto winter started with a drop in late May 2021 from over $2.4 trillion when its future was determined by Tesla’s bitcoin rejection and China’s rejection of bitcoin as a transactional currency among other factors. Albeit, ADDX CEO, Oi-Yee Choo disclosed that cryptocurrencies are here to stay as they no longer exist only in wealth and investment conversations. Thus, the recent rise shows that there is a need for cryptocurrencies and the industry to come to their defence.

Factors that determine the value of Bitcoin

Despite the prominent nature of bitcoin, its value remains a mystery to people or outsiders of the cryptocurrency community. Like every currency, bitcoin experiences fluctuations. Thus, right now or in the nearest future, some factors will always influence the rise and fall of cryptocurrency. Let’s have a look at some of them:

Supply and Demand

Any business, product or service with the expectation of high turnover or adoption, operates within the law of demand and supply. It is the factor that determines the value f anything that is traded, including digital assets. Despite the fall in crypto and other cryptocurrencies, for instance, if there is an increase in the number of people willing to buy Ether or bitcoin, then people willing to sell, the price will go up and vice versa. This in a nutshell means that more committed buyers equal prices going up. More committed sellers equal the price going down. The rest is just mental masturbation.

Regulation

Like every business, operating within a society, some regulations affect positively or negatively, the operations of the business. In the crypto world. There is an increase in the demand for regulations to centralize the assets, thereby impacting the value of the currency. Since Bitcoin is decentralized, meaning it isn’t tied to any specific central governments, the regulations can directly impact Bitcoin value because they apply to investors. If there’s fear about a particular government statement or decision, it could cause BTC’s price to fall.

For example, nairametrics reported that the recent instability in bitcoin price can be traced to the parental conflict where China issues a ban on cryptocurrency only for a week after, the U.S released a statement, reading no intention to ban cryptocurrency.

Investors Decisions

In every venture known to man, the amount of investment can help give the business a push and promote mass adoption. However, in some businesses where there an individual decision affects the growth of a business, there is a higher chance of a low blow should in case such an investor changes their mind or moves on to better options. For example, in 2021, through a tweet by Elon Musk, there was a high value on Dodgecoin as it was anticipated. However, Elon Musk’s decision through a tweet reading “breaking up with Dodgecoin” influenced a price dip.

Bitcoin is still in its infancy

Don’t kid yourself by thinking that because Bitcoin has scaled some years of use for exchange and other uses, it is now a grown-up among other means of traditional transactions. Bitcoin unlike gold, which has been around for a long time and used as a means of exchange, is reasonable to accept its price, demand, stability and supply. Likewise, fiat currency, although volatile due to country regulations and economic circumstances, are predictable.

Bitcoin, on the other hand, has just been around for a short time. The currency is still trying to find its foot in the price and stability phase. This implies that prices will continue to be affected by decisions of investors, users as well as government policies and regulations until this coin reaches a stable point.

Media priming and framing

Media operates in a socio-political milieu. They always perform the function of surveillance of society and keeping listeners, viewers and readers informed about happening in their environs. However, the media sometimes do too much priming and framing by presenting experts’ predictions that aren’t backed up by concrete evidence and then used to evaluate the whole performance of bitcoin.

In the crypto world, it is not uncommon to frequently see superlative words used, especially by people who are heavily invested in Bitcoin. This also translates to saying that the amount of attention given to an asset like bitcoin serves to influence Bitcoin’s price, causing it to rise and benefit buyers who hold a large share.

A good example of media hype happened in 2021 during the announcement of Proshare’s Bitcoin Strategy ETF (exchange-traded fund) which witness the rise in Bitcoin price to more than $69,000. In few weeks after the hype, the price shrank to $50,000 when investors realised that the EFT has an affiliation to Bitcoin through futures traded on commodity markets.

Fast Facts

Despite the recent rise in the price of Bitcoin on Saturday, the coin is currently down to a market cap of $447.05. This is an indication that for a long time, the coin might be experiencing an upward and downward challenge. However, if you are a bitcoin enthusiast, you can buy on government-approved cryptocurrency exchange sites like coinbase. It is imperative to note that the market is highly volatile and as an investor, there is no guarantee of your return.

Final Note

Investing in Bitcoin or any other type of cryptocurrency is risky and speculative. It is best to understand that these currencies are still maturing therefore it might be too soon to write off or undervalue. There is a high chance that changes might be realized in later future. I guess now we have to wait and see the changes they have to offer when that time comes.

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Does the recent rise in bitcoin mean it’s back? was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.