What Influences the Price of Bitcoin?

Last week, the price of Bitcoin rose to its all-time high above $61,000 to almost reaching the $62,000 mark. According to Coindesk.com, the all-time high was $61,556.59. However, this week on Monday as bears took over, the price dropped to almost $54,000.

Over this week since the price drop on Monday, Bitcoin has been able to gain value and rose to a high of about $60,083 on Thursday.

Bitcoin has gained popularity over the years and its price continues to rise. These are some of the reasons why its price is rising.

Bitcoin Rises to an All-Time High

Investment from Institutions

  • Square inc. purchased 4709 BTC at $50,000,000 on 7 October 2020. Also, it has invested an additional $170,000,000 into Bitcoin, approximately 3318 BTC.
  • Tesla bought $1.5 billion worth of Bitcoin this year.
  • Meitu, a Chinese tech company bought $17.9 million in Bitcoin earlier this month and has purchased an additional $21.6 million worth of Bitcoin this week.

With institutions such as these investing in Bitcoin, the cryptocurrency continues to gain an advantage.

Means of Payment

Bitcoin is also being used as a means of payment. The way you use cash to buy goods and services, Bitcoin can also be used similarly. Bitcoin can also be used to receive payment for goods and services sold. Examples of these goods and services are;

Video games such as Xbox games, online gift cards, donations where foundations such as Wikimedia Foundation can receive donations in bitcoin, and in payment of services such as Express VPN.

Some companies using Bitcoin as a means of payment are; Paypal where payments can be made or received using Bitcoin, and Microsoft.

Accessibility to People

Bitcoin has become an important asset both as a means of payment and a store of value and more people are investing in it.

The presence of platforms that facilitate buying and selling of Bitcoin has provided access to a lot of people. This has enabled retail investors to trade different amounts of Bitcoin based on the money invested. Examples of these platforms are; Coinbase, Bitstamp, Binance, and Paxful.

With more people interested in investing, demand for cryptocurrency rises which causes a price increase. Well-known companies investing in Bitcoin may likely motivate more people to invest hence its demand increases.

Scarcity of Bitcoin

Bitcoin’s supply is limited in number to only 21 million Bitcoin. The amount of Bitcoin currently in existence and circulation is around 18.6 million. The number of Bitcoin not yet mined is below 3 million Bitcoin.

As Bitcoin continues to be scarce and people becoming aware of the investment opportunity, demand for cryptocurrency will rise. This is because when a resource is in short supply, it tends to be attractive resulting in its value appreciating.

Final Thoughts

Bitcoin is one of the cryptocurrencies available in the world today. Some of the others are Ethereum and Litecoin. Measured by market capitalization, Bitcoin is the world’s largest cryptocurrency. Cryptocurrencies are on the rise and Bitcoin is leading the way. Let’s see what the future holds.