7 factors that affect the price of bitcoin

 7 factors that affect the price of bitcoin

      There are many factors that can affect the value of Bitcoin, we will talk about the seven most important ones.

      The main cryptocurrency can drop significantly on many occasions, but that does not mean that we have to take desperate steps.

      Volatility is a characteristic, it is far from a bug.

  It is clear that there are many factors that affect the price of Bitcoin, the main cryptocurrency like many other digital assets, which is very volatile.  Without going too far, we saw this same year as a historical minimum and maximum experience.

  Trading never stops in the BTC world.  In this sense, volatility is a characteristic rather than an error.  It is essential to be prepared to see drops of up to 20% from moment to moment, even to see increases in the same time frames.

  You have to be very careful when this happens, when the price goes down.  We must focus on our strategy and have confidence in the assets we invest in;  And consider that there are always ways to protect yourself from cryptocurrency risks.

  The Seven Factors Affecting Bitcoin's Price Drop

  The important role of geopolitics

  In early January 2020, Donald Trump raised doubts about the remote possibility of the United States entering a war abroad with Iran.  The price of Bitcoin was affected in the same way as the rest of the liquid markets.  In these types of cases, BTC is no exception to the rule.

  Macroeconomic context

  In March 2020, the COVID-19 pandemic spread across the globe and we witnessed a liquidity crunch in all the markets known as Bitcoin Black Thursday.  The price of Bitcoin lost its value by about 50% to reach its lowest level in 2020. Soon after, the cryptocurrency experienced a huge recovery thanks to the last resort HODLers who took advantage of the situation to raise a larger sum.

  By September 2021, as the whole Evergrande affair began to take hold, panic seized the financial markets imagining the Lehman Brothers scenario of a global financial crisis thanks to a company default.  To this we add the media that did nothing but carry more firewood to scare investors, causing all the markets, including BTC, to crash.

  After investors analyzed the situation, calm returned and the price of Bitcoin continued to rise.

  trustless

  When many of the events that we comment on in this list occur, a lack of confidence in Bitcoin is noticed and may lead to some people wanting to sell their crypto in large quantities, causing the price to skyrocket.

  Regulatory risks

  It is clear that when the US announces regulation of cryptocurrency, it is negative for Bitcoin and the market reaction is immediate.  People who exist in this world only for money, decide to sell their assets through.

  Those in the industry who are in control of the fruits of their labor know that this does not change what is in store for the long-term cryptocurrency revolution.

  This is essential in the medium and short term, the more confidence you have in a cryptocurrency, the less it will be affected by events that add volatility in the short term.

  Take profit at scale

  What will happen if bitcoin price reaches $100,000?  This question comes up constantly and we all want to see what happens at that time.  It is possible that no one could foresee this situation;  Also, we don't know if reaching this value will become an immediate channel to continue rising, or if we will witness a significant correction.  This is something that makes staying in this market very exciting.

  What we can clearly see is when a large and well-known investor, like Tesla, decides to sell a portion of his Bitcoin in the first quarter of 2021 to prove the liquidity of his strategy, hurting the price of the coin.

  Many people will overreact, imagining the worst, which will lead to massive selling.  But in these matters, and as on many other occasions, it is necessary to take a step back.

  Security issues in the Bitcoin network

  Fortunately, the Bitcoin network has not been hacked since the day it was created.  We just had to make a rather big mistake that left the network idle for a few hours.  On August 15, 2010, an error in the BTC blockchain compromised more than 184 million BTC.

  Known as the “Incident Value Exceeded,” the error referred to block 74,638 of the BTC Blockchain.  In this, 184,467,440,737.09551616 BTC generation transactions were found for 3 addresses.  2 addresses received 92.2 million bitcoins, on the other hand, the miner who managed to solve the puzzle related to the block was rewarded with 0.01 bitcoins.

  The error occurred thanks to the fact that the code used by the Bitcoin Blockchain to verify transactions before adding them to the block ignored amounts so large that they exceeded the BTC amount limit when added.

  Satoshi Nakamoto and his company were responsible for releasing a new version in just 5 hours, which successfully resolved this bug.  Then, the blockchain had to fork to reject the offending block.

  Since then, all nodes have accepted the patched version of the Bitcoin Blockchain as the authorized version for the transaction history.  Block 74,638 no longer exists for users who use the longest blockchain as a reference.

  Regardless of this bug, the bitcoin network never stopped being online and available;  Which appears after so many years, an uptime of over 99.9% since the moment it was created.

  Keeping in mind, if a network hack occurs or is to happen by any chance, it could have serious consequences for the price of the cryptocurrency.

  In an effort to prevent these kinds of situations and skepticism from occurring in the major cryptocurrency, extensive work is being done to ensure that the development of BTC is on the right track.  That's why it took a long time for the Taproot update to be released, and when it did, everything ran very smoothly.

  Failure to respect and follow the rules of the protocol

  The evolution of Bitcoin is due to the fact that users can check at all times that they continue to maintain and respect the three basic rules of the protocol.  If any of them are broken, the situation will become very complicated for the assets which are: no monetary inflation, no confiscation and no control.