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What factors can influence the price of Bitcoin in 2021?


Bitcoin has always been a speculative asset, and the frequent roller coasters in price, as well as the volatile moods of institutions and holders, show this. Most recently, Bitcoin fell to its January lows up to $28,000, and today it has already settled and increased to $36,000. Many different related factors can contribute to price correlations, as well as volatility.

It is worth remembering that Bitcoin is a completely decentralized asset that does not depend on regulators or world banks, so it is completely unique because of its decentralization, independence from the government and banks, and resistance to various kinds of manipulations and pressure on it from big powers. What factors can be the catalysts of changes in the price of Bitcoin?

Supply and demand have always influenced and will continue to influence the value of all assets, whether they are fiat funds or non-fiat money. But these factors are especially relevant when it comes to cryptocurrencies. As of the end of 2020, about 89% of the total number of Bitcoins were mined, which means that the constantly decreasing supply has a significant importance in the increase in the price of Bitcoin over the past year and a half.

Also, do not forget about the lack of liquidity. Bitcoin itself is the most liquid crypto asset, but if you compare it with various fiat currencies, such as the euro, pound, or dollar, then this level of liquidity is an order of magnitude lower than that of fiat funds. This directly indicates that it may be a little more difficult to buy and resell Bitcoins on the crypto market due to the fact that daily trading volumes are small, and various speculations, sanctions and calls from different countries can influence the price too much.

Various news from countries can become both a positive wake-up call for price growth, and a negative wake-up call that will provoke a transition to a long bear market. Crypto assets do not have a global adaptation in countries, with the exception of El Salvador, and countries do not want to see an asset in their state that cannot be controlled and traced.

It is worth noting that Bitcoin has never stopped growing over the past two years. Back in the summer of 2020, its price was about $9,000, and even after the last fall of bitcoin in June, its price is now $36,000, which shows the dynamics of growth by four times in just a year. When Bitcoin was trading at a price of almost $65,000, in April the price of Bitcoin showed a growth momentum of almost seven and a half times, so there is no doubt that the upward trend of Bitcoin will continue and it will grow further.

The material has been provided by InstaForex Company -