Bitcoin’s price is primarily affected by supply and demand, but those are not the only factors that affect its price. The higher the demand for Bitcoin, the higher people will be willing to pay for it. Consequently, the price will go up. In contrast, if there’s a low demand for Bitcoin, people will be willing to get rid of it for a lower price. Likewise, the price goes down.
Bitcoin price refers to the last price of a Bitcoin trade conducted on a specific exchange. There is only a limited amount of bitcoins in circulation. Although new bitcoins are created at a predictable rate, demand must follow this inflation level to keep the price stable. This means that the supply of bitcoin is determined by the finite capped number of BTC and new bitcoins introduced into the market when miners process blocks of transactions.
Other factors include competition from other cryptocurrencies such as Bitcoin Cash, Litecoin, and Ethereum. Cost of production is another determining factor. This refers to the hardware and electricity costs. Moreover, the availability of a cryptocurrency on currency exchanges is crucial for its survival. Consequently, it also has a huge effect on Bitcoin’s price. The more popular an exchange becomes, the easier it is to create a network effect for the cryptocurrency to thrive. Finally, regulation and government stability also affect Bitcoin’s price.