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What Determines the Bitcoin Price?

After a bearish episode, the bitcoin price climbed to a peak of about US$1 billion in April 2013. After that, the Bitcoin price dropped to under $50 in mid-April and again rose to over $100 in late June. It declined steadily to $7,200 by late November and then began a rapid rise again, peaking at $19,374 in December of that year. In the years since, Bitcoin has steadily increased, reaching a high of over $1,000 on 18 November.

Demand and supply are two factors that determine the Bitcoin price. As the demand for Bitcoin increases, so will the price. On the other hand, as the number of cryptocurrencies rises, so does their value. Unlike most fiat currencies, bitcoin’s demand is relatively immune to inflation, allowing it to rise and fall without the need for government intervention. If, however, the demand for Bitcoin falls, the price will rise as demand for the currency declines.

The volume of cryptocurrency trading shows how liquid the market is. Higher volume indicates that more investors are buying and selling cryptocurrency. Volume measures how much crypto is traded in a 24-hour period. As the first cryptocurrency to be created, Bitcoin has experienced a gush of new investors. Currently, more than half of the current Bitcoin holders bought their coins in the last year. But that hasn’t stopped the price from rising sharply. If we look at the history of the price of Bitcoin, we see that it has experienced a range from below $30 to more than $60, a massive drop from its previous low.

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