Factors Influencing The Price Of Bitcoin
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Factors Influencing The Price Of Bitcoin
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You might be knowing 2
all about Bitcoin, but 
ever thought about the 
factors that determine 
the price of Bitcoin. If 
not, then today, we will 
let you know it. By 
asking any 
cryptocurrency advisor
s
, they will make you 
understand how 
Bitcoin is much 
different from buying a 
bond or stock.
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● Other than investment in traditional currencies, it is not the case with 
Bitcoin, as it is a decentralized currency which eliminates the role of a central 
authority like a bank or government. 
● So now it gives a clear understanding that no inflation rates or monetary 
policy apply to Bitcoin. Instead, the price of Bitcoin is determined by other 
factors.
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Factors Influencing Price Of Bitcoin
● The factors which influence the price of Bitcoin are:
● Competition with rival cryptocurrencies
● Rewards being issued to miners 
● Influence on the supply of Bitcoin
● Sales being governed by regulations
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Competition With Rival Cryptocurrencies
No doubt, Bitcoin is the most popular and well-known cryptocurrency, but that 
doesn’t mean, it is free from competition from other rival cryptocurrencies. 
Even though it is still a dominant digital currency in market capitalization, still 
there are altcoins like Litecoin, Ether, EOS, XRP and Bitcoin Cash that have 
become its closest tough contenders by the year 2020.
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Rewards being issued to miners
Bitcoins are virtual currencies and are produced products incurring real 
production cost. So far, electricity consumption is known to be its major 
factor. Bitcoin mining depends on a complex crypto mathematical 
problem, which is solved by the miners. The first one to find gets 
rewarded with a block of new-minted Bitcoins.
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Influence on the supply of Bitcoin
● It is one of the reasons which influences the price of Bitcoin. Two 
ways which influence Bitcoin supply. Firstly, the fixed rate of newly 
created Bitcoins allowed by the Bitcoin protocol.
● The introduction of new Bitcoin in the market happens when the 
miners process the blocks of transactions. Also, the rate during the 
introduction of the new coins gets slow by time. Secondly, due to the 
existing number of Bitcoins allowed by the cryptocurrency eco-
system does impact the supply. 
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Sales being governed by regulations
● Since Bitcoin does not allow any interference of central authority, so 
it is completely depended on miners and developers for the 
processing of transactions and safety of blockchain network. 
● It is because it takes too much time to resolve fundamental issues. 
Thus the community is divided for the betterment to increase the 
transactions. 
● Now these forks are divided into two types, Soft forks and hard forks. 
The difference between these forks is that soft forms do not lead to 
any changes in the creation of new cryptocurrency, whereas hard 
forks are the opposite of the former.
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Conclusion
As you can see in the current year 2020, many of the altcoins, including 
Ether, Litecoin, Bitcoin Cash, XRP and EOS have become its closest 
competitors. So this can be one of the major factors that influence the 
price of Bitcoin. Following other factors are the influence of supply, 
rewards given to miners and the sales being governed by the 
regulations. 
Sources
https://www.cryptoknowmics.com/crypto-advisors
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