The price of bitcoin is determined by supply and demand in the market, and demand determines its value.
How is the price of Bitcoin set? How is it affected?
First of all, people have to be optimistic about its future development, so that people will pay for it, and the more people pay for it, the higher the price will be.
Due to the nature of Bitcoin, only 21 million coins can be produced in the end, causing a certain scarcity in the market.
However, with the passage of time, if Bitcoin only stays in the development stage of the code, it is meaningless. It needs to be reflected in the practical application scenarios, or it will only be a collection value, circulating among Bitcoin enthusiasts.
The price we usually see for Bitcoin is the reference price or current trading price given by the exchange. However, you will find that the price of each exchange is different, because each exchange has different stock and circulation of bitcoins. For example, Huobi has 1000 bitcoins and 800 users buy them, while Coinbase has 800 bitcoins and 1000 users want to buy them. So on a supply-demand basis, Coinbase’s Bitcoin price is higher than Huobi’s.
To sum up, the basic factors affecting the price of bitcoin mainly include the following aspects:
- Progress in technology research and development
- Extensive application of technology
- The consensus of the people of all countries
- The degree of capital interference
- The status of exchange circulation