I was discussing with a business colleague yesterday when he asked me some questions about Bitcoin Trading and Bitcoin Investment. I think it is important you know that the Bitcoin investment we were talking about was NOT Zarfund, iCharity, Helping Revolution, Ultimate Cycler or MMM. We were talking about a proven Bitcoin investment that offers you PREMIUM business training for FREE while you also earn through referrals. If you care to know; we were talking about Bit4Bits (www.bit4bits.com). His question was; what are the factors that dictates/affects Bitcoin prices?
You need to know before anything that both Bitcoin buyers and sellers attention on the market is always focused on the CryptoCurrency price. This is a defining factor that empowers traders to makes decisions on whether to buy or sell Bitcoins. In this post I shall be discussing some factors that affects the prices of Bitcoins.
Factors That Affects Bitcoin Prices
- Supply and demand:
This is honestly the major factor that dictates bitcoin prices. This is simply because the amount of Bitcoin being traded at exchanges is just a fraction of the available supply in circulation. Most Bitcoin is kept as investment, so it isn’t always for sale. In other world Bitcoin price is determined by supply and demand! Although Supply is well defined and well controlled but Demand is ultimately set by the number of buyers who are willing to buy additional bitcoins.
The Bitcoin ecosystem has several news sites and forums that only talk about bitcoin, cryptocurrency or institutions playing with this technology. These news and content influence the market and speculators significantly, just like it happens in the stock market. To survive speculation follow the trends and remember to “Buy on fear, sell on greed”.
The cost to mine new Bitcoins affects the price. The cost of mining depends on: electricity, hardware, and maintenance. Miners calculate these costs and sell their Bitcoin for a premium to be profitable. A miner won’t sell his Bitcoin for less that the production cost unless they are running low on cash. New coins only enter the system through mining. Mining generates new coins as an incentive for proof of work. This process generates new coins at a fixed rate. The number of bitcoins in circulation at any time is calculable.
- Local Retail Broker:
A broker is an agent, dealer a person who buys and sells goods or assets for others. The more this Local Retailer the more the demand for bitcoin. Thereby, affecting the price of Bitcoin in the ecosystem. The number of brokers depends on the profitability of the enterprise of brokering which is in turn affected by the number of possible customers or buyers.
- Inflation Of The Local Currency:
Inflation is when the general level of prices rise, each monetary unit buys fewer goods and services. The effect of inflation is not distributed evenly in the economy, and as a consequence there are hidden costs to some and benefits to others from this decrease in the purchasing power of money.The is true to an extent! Inflation in the country can affect the price of Bitcoin in that country.
- Increase Merchants Acceptance:
At the moment of doing this post; Bitcoin is now accepted by over 100 thousand merchant. As a matter of fact, bitcoin is gaining more acceptance that Paypal as it is not accepted on eBay, Amazon, Alibaba and the likes. This also have a way of affecting the price of Bitcoin. No wonder some people believes Bitcoin price will greatly increase next year.
If the truth must be told. There is actually no reason why you should not consider investing or trading bitcoin. I hope this help my business friends!