Bitcoin is something that experiences greater price variation and quicker price variation than almost any other trading instrument. All of us are well aware of this fact, and many Bitcoin traders often try to get to the root of these factors as to why the price of Bitcoin moves so much? There are many reasons, some constant, which always stand true, and some dynamic, that keep on changing from time to time with the changing economic scenario. However, as an apt trader, one must know why the price of Bitcoin moves so much. This not only helps in forecasting the market while planning your portfolio, but it also helps to correlate the price of Bitcoin with respect to other market indicators.
Why Does the Price of Bitcoin Move So Much
Price variation on Bitcoin exchanges happens due to a number of reasons. Let us examine a few:
1. Perceived Store: The store of Bitcoin is a limited one, that is, Bitcoin can be produced only to about 21 million BTC. If there is a fluctuation in the position of some fiat currency, investors like to buy more or less Bitcoin and this changes the price of Bitcoin.
2. Market News: Bitcoin belongs to a kind of unregulated segment; at least there is no government or central authority to control the circulation and production. As such, any market news, especially that comes from larger BTC holders, leads to a variation in the price of Bitcoin almost instantaneously. Both feelings of panic and euphoria in the market, with regards to Bitcoin, make the price of Bitcoin move so much.
3. Changing Environment: The value of everything changes with its perceived and actual utility. The same applies for Bitcoin. And the current global scenario is that every day there are new inventions and discoveries, some of them in favor of this digital currency, while some totally tend to weaken its position. This in-turn is reflected as the price of Bitcoin moves so much.
4. Regulatory Arbitrage and Security Breaches: Regulatory arbitrage has become well a part of the Bitcoin trading. Not only are there operational loopholes, but security breaches also happen with respect to the IT component in Bitcoin. This is another factor as to why the price of Bitcoin moves so much.
So yes, there are many reasons why the price of Bitcoin moves so much. Above are mentioned just a few that we most commonly encounter, but anything and everything in the economy that changes ultimately leads to a price variation in the financial instruments, and Bitcoin is not proof of such things. Therefore, companies like executium.com have emerged up so rapidly because they help you trade forecasting Bitcoin price shifts based on market conditions well in advance, which gives you extra leverage as a trader. It is not possible to stop the inevitable Bitcoin price movement; however, one can gain the maximum out of the situation by strategizing in the correct manner.