Prices of bitcoin are very volatile, and there are a few reasons why this may be the case. One way to analyze the prices of bitcoin is by looking at how it is influenced by eight factors that move the price downwards.
We have all been there, having bought bitcoin at a high price and waiting for the value to go up. And it is actually surprising to see that the price of bitcoin does not go up in most cases.
When you look at most cases where the price of bitcoin has gone up, you will realize that most of these cases usually involve some external factor or event which influences the direction of prices. Here are the factors that influence the price of bitcoins downwards:
Table of Contents
1. Geopolitics Plays an Important Role:
Geopolitics plays an important role in the price of bitcoin. For example, we have seen that there are countries where the price of bitcoin is low, such as China and South Korea.
In China, the government is cracking down on cryptocurrency trading, while in South Korea, there were some news reports which talked about a ban on trading in cryptocurrency.
This was when the prices of bitcoin went down significantly. Now, it is important to note that we can’t say whether this will happen again. However, what we can do is analyze the effects of geopolitical factors on the price of bitcoin.
2. The Macroeconomic Context:
The macroeconomic context is another factor which affects the price of bitcoin. There are some countries where the value of bitcoin is low, such as Venezuela, Ecuador and Zimbabwe.
This is because, in all these countries, there are extreme cases of hyperinflation, and this means that people don’t want to hold their assets in currencies which are losing value.
They can just take their money and convert it into bitcoins so that they can escape from this scenario.
3. Regulatory Risks:
Regulatory risks are also another factor that affects the price of bitcoin. In the U.S., for example, there are some risks around future regulations which has led to a decrease in price.
Now, it is also important to note that we are not certain whether there will be regulations or not and how this will play out in the future. However, what we can do is attempt to analyze the effects of regulatory risk on the price of bitcoin.
4. FUD:
FUD means fear, uncertainty and doubt. This is another factor which affects the price of bitcoin. There are several firms which have predicted that the prices of bitcoin will go down. And several media outlets have also published news about how the value of bitcoin will go down in the future.
As a result, this has led to a decrease in prices which is what we call FUD. Now, it is important to note that if an investor thinks that the price of bitcoin will increase, they can just buy it instead.
5. Lack of Trust in Bitcoin:
Bitcoin is not well-trusted by the public in some countries. This can also be a reason for the price of bitcoin going down. If people don’t trust bitcoin, they will not want to buy it, and if they don’t buy it, they won’t think that bitcoin is a good investment choice.
But from our experience, we have seen that there are investors who believe in bitcoin, and this has led them to continue buying the currency. In fact, the people who have invested in bitcoin are often the ones who are moving the price upwards.
6. Large-Scale Profit-Taking:
Large-scale profit-taking is another factor which affects the price of bitcoin. In this case, there are investors who have invested in bitcoin, and they are trying to sell it at a high price.
This is what is known as taking profits. Now, we don’t know whether these investors will be successful and how much money they will actually make by selling.
But we do know that if a large number of them sell their bitcoins at the same time, it can lead to a downward trend in prices. This is a great opportunity for you to make some profit. Why not visit the website bit index ai uk.
7. A Hack of the Bitcoin Network:
We all know that Bitcoin is still a work in progress. And this means that there is a possibility that it may develop a major bug, or it can be threatened by hackers who want to steal the cryptocurrency.
As a result of this, we have seen cases where the price of Bitcoin fell by 20% to 30%. Now, if something like this happens again in the future, it will cause the price of bitcoin to go down significantly.
Conclusion:
When you look at bitcoin, you will realize that the price rarely goes up. This is because there are factors which influence the price of bitcoin downwards. The main ones are geopolitical events, macroeconomic factors and the lack of trust in cryptocurrency.
We have also seen that there is a possibility of large-scale profit-taking. Now, it is important to note that if an investor thinks that the price of bitcoin will go up and buy it instead, this can lead to a large increase in price as well.
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