Cryptocurrency has become one of the hottest and most volatile investment options around. There are stories of those who have hit it big by getting in on Bitcoin at the right time while others have been left holding the bag for significant losses.
Whether you are new to the game or have been around for a while, you may be wondering which factors have the biggest impact on Bitcoin price. Though there are more than what is listed below, these are critical factors to consider.
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Institutional Interest
In the early years of Bitcoin, it felt like a rogue investment. Bitcoin price USD would hit staggering highs but there was a prevailing feeling that a lack of institutional interest from banks, hedge funds, and other major investment and financial institutions left it feeling more like entertainment rather than a true form of investment.
That said, more and more major institutions are beginning to accept Bitcoin as a regular form of payment and investment. As more of these institutions join the fray, the credibility and price of Bitcoin will continue to grow. Bitcoin is not on the fringe as it once was and more major institutions are beginning to adopt cryptocurrencies, in general.
Regulation
Initially, one of the most hindering factors surrounding Bitcoin was the lack of regulation. Bitcoin felt like a rogue investment because no one really knew how to handle it. For a long time, it had credibility, but a lack of government regulation put an air of uncertainty around crypto as an investment type.
That said, there have been regulations to hit the market surrounding Bitcoin. When there are positive regulations, or further adoption of regulations, it can have a positive impact on the price of crypto. That said, negative or strict regulations – and outright bans – can wind up having a hugely negative impact on the overall impact of Bitcoin and crypto overall.
Security
We have heard plenty about how blockchain technology is changing online security in many ways. That said, we have seen far too many crypto platforms fall prey to hacks that ultimately left investors at risk of losing a lot of money. Bitcoin remaining a secure network is crucial for being able to maintain trust in not only Bitcoin but digital currency at large.
When there are security-related technologies or measures introduced, there is always the chance that they add to network security. Doing so will boost confidence in Bitcoin and crypto, which can then have a positive impact on price. Investors are not going to want to put their money into something that they feel can be easily compromised by unwanted parties.
Other Crypto
Though Bitcoin was the first to market, they are no longer the lone wolf. There are thousands of other cryptocurrencies, known as altcoins, that hit the market all the time. Most of them die out before anyone really has an idea of what it was in the first place, but there are some that wind up making an impact of their own. Consider Litecoin, Dogecoin, Ethereum, and others.
Bitcoin remains the original and easily the most well-known option on the market. When other forms of cryptocurrency do well, Bitcoin does well by proxy. For investors who are new to the market, it provides confidence in cryptocurrency as a viable investment and the biggest name often does the best when the market as a whole seems viable.
There are several other factors that contribute to the price of Bitcoin and other cryptocurrencies. Though the volatility has dropped a bit, Bitcoin is still at the whim of several factors that can impact the price.
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