The reality is that cryptocurrency is still a new and speculative investment with little historical data on which to base predictions. Even for a fact bitcoin billionaire, a well known trading platform, can only provide market predictions to certain accuracy because of lack of historical data available in general. We can only make a rough guess about what the value of bitcoin may look like in a few months or years, but the reality is that nobody truly knows. However, if you are still considering investing in cryptocurrency then you need to consider a few factors that can govern the price of the cryptocurrency. Three of the most dominant factors affecting the cryptocurrency prices are mentioned below.
1. Cryptocurrency Availability
Currently there are 18 to 19 million cryptocurrencies in circulation and the production will stop once the amount of cryptocurrency reaches 21 million. Industry analysts frequently cite this inherent scarcity as a key factor in the attractiveness of cryptocurrencies. According to professionals, Bitcoin is valuable because its users value it. Because of the psychological component, everyone is buying, according to Nelson Merchan, co-founder of Johnson’s Light Node Media. Because of this, it could be challenging for the typical customer to determine whether Bitcoin and other cryptocurrencies are trustworthy. Only when people seek out something in short supply, even if it wasn’t previously available, does the entire theory of supply and demand make sense.
The beginnings of Bitcoin “almost kind of appear like a hoax,” claims Merchan. While he claims to have occasionally seen his cryptocurrency holdings reach millions of dollars since he started investing in 2017, he has also witnessed them vanish in an instant.
2. Commonplace Adoption
The rate at which new consumers are purchasing and investigating cryptocurrencies, according to Waltman, is one of the major drivers fueling the price surge of Bitcoin. Crypto technology is being embraced more quickly now than when humans first started using the internet, she claims. The wide scale adoption of cryptocurrency could be because trading has become easier after the advent of trading bots like Bitcoin Billionaire. In the event that it persists, the compounding acceleration of new adoption may continue to drive up the price of bitcoin.
According to information from the digital asset management company CoinShares, the adoption of bitcoin has been rising at a rate of 113 percent every year. People accepted the internet at a slower 63 percent rate, however. The paper argues that there will be 1 billion users by 2024 and 4 billion users by 2030 if people adopt Bitcoin at a rate similar to (or greater than) that of the early days of the internet.
According to a report published by CoinDesk last month, there were an estimated 66 million new wallets created globally between January 2020 and January 2021, a 45 percent rise. Coinbase, a well-known cryptocurrency exchange, claims to have over 73 million members globally, while Gemini, another exchange, recently published its “State of U.S. Crypto Report,” which claimed that 21.2 million Americans possess cryptocurrency.
In recent months, federal officials have made it obvious that they are paying attention to cryptocurrency. Industry insiders have recently suggested that “hawkish” government regulation is one of the main reasons behind Bitcoin’s underwhelming pricing. There are many unsolved questions raised by cryptocurrency legislation. A recent infrastructure measure requiring all cryptocurrency exchanges to report their transactions to the IRS was signed by President Joe Biden. Similar to this, Treasury Secretary Janet Yellen recently opined that stablecoins, a sort of cryptocurrency whose value is tied to the U.S. dollar, ought to be governed by the government.
According to a market white paper issued by Flourish, a fintech platform created for financial advisors, the discussion of regulatory laws is “patchy.” Any new regulation could have an effect on value when it comes to a relatively young asset class like cryptocurrencies.
For instance, investors watched the price of Bitcoin fall when China outlawed cryptocurrencies in September 2021; but, it has since climbed and returned to its typical volatility. Although bitcoin
Summing It Up!
As stated earlier, nobody can accurately predict what the price of cryptocurrency will be like in the future.However, as large corporations look for ways to commercialize their products in the virtual world, experienced analysts are currently reevaluating the cryptocurrency industry. The rise of multiverse realms, gaming, services, and activities has changed investor perspectives of Bitcoin and increased the appeal of altcoins. Many experts are hesitant to make a figure and a time estimate, but everyone is hoping for a bright future of cryptocurrency.