Bitcoin price establishing is an interesting phenomenon and widely differs from the way the price of ordinary money is set. First of all, despite popular belief, Bitcoin does have a cost price. It is set as a combination of expenses on electricity, transaction fees and the installation/purchase of software. However, the price of Bitcoin is not determined by its cost price and is mostly estimated by consumer demand. It causes huge fluctuations in the price of Bitcoin, as Bitcoin has no backing, and traders are largely dependent on the news of Bitcoin’s price, multiplying volatility of the asset.
Bitcoin price rallied through a key resistance zone and secured a new 2020 high at $12,000. What will happen next?
Please reply,
Iryna Kondrat
The problem with Bitcoin is the mindset of people surrounding it. Bitcoin was invented as a cryptocurrency to enable a peer-to-peer exchange.
However, people are investing in Bitcoin. The price of Bitcoin is not assigned to its cost price anymore but to "supply and demand."
As long as the mentality of "investment" prevails, prices will fluctuate wildly (up and down).
Dear Iryna,
It is very difficult to say what will happen with Bitcoin. At the moment it seems it will rise but how much, we do not know. In my opinion this is not bubble ... This is just Bitcoin and his fluctuation. We have to accept that we live in a new digital age and Bitcoin is a important part of this new age. Is is seems that investors have more trust to Bitcoin than to US dollar, it we consider current movement.
Dear Rami Alkhudary Tijana Šoja
I fully agree with your opinion that the Bitcoin price will fluctuate because of its speculative nature. Despite jaw-dropping returns, cryptocurrencies are rife with risk because of excessive volatility, no fundamental backing by a central bank or a government, low scalability, regulatory issues, limited use, activities of hackers and cybercriminals. But media attention to Bitcoin has attracted new investors looking for higher-yielding assets. Bitcoin will try to overcome $ 12,000 again.
Thanks a lot for your answers.
Best regards, Iryna Kondrat
As always it depends on your perspective.
As you mentioned right from a trading perspective ,especially charts analysis, bitcoin broke a major resistance with multiple bullish signs (TK cross on daily, 4h EMA bounces, cloud tops etc.). So from a chart side we can assume some bullish movement.
But this is just a trading side.
From the demand side its hard to argue that we saw any relevant development in use case in the last two years. So the question is what kind of demand do we have?
From technology perspective transactions are still slow and can't compete with any major payment providers or even other cryptocurrencies.
Also POW isn't in any case sustainable or scalable.
Also you have to consider what's happening in the world (pandemic, stock markets, possible huge recessions).
So as you see fundamental analysis and charts analysis go in different directions.
Dear Felix Eigelshoven
Your comments are very precise. Thank you!
Best regards, Iryna Kondrat
In a simple word , the grey area about bitcoin is that the monetary base in countries is affected by a positive trade balance. There is no monetary base in Bitcoin and it is only based on supply and demand. There is definitely a bubble in the bitcoin market. I know several emerging digital currencies that have a monetary base. But they are not as popular as bitcoins.
"There is definitely a bubble in the bitcoin market. I know several emerging digital currencies that have a monetary base. But they are not as popular as bitcoins."
Armin Saatian Why you think that already we have bubble?
In my opinion the market of digital currencies is at very early stage which means high volatility, it is natural. I am not going to judge the price but I think that when the supply of new coins will be lower and lower and volatility could be also lower and lower.
Mohd Majid Akhtar
Thank you for your mindful opinion.
Best regards
Iryna Kondrat
There's a pattern for sure. If you are into Technical Analysis, at this present considering the Bitcoin price it will surely have a correction and will be dumped in huge volume.
If you want to analyze, the pattern of the pricing, market cap, and volume feel free to check out the dataset which I've published: Data Bitcoin Historical Prices Dataset
Thanks.
Dear Sumit Banik
Thank you for your answer. These data are definitely useful for research.
Best regards Iryna Kondrat
Bitcoin is nothing more and nothing less than unlicensed gambling.
Details are in my book: Bitcoin: The Mother of all Scams. https://www.amazon.com/gp/product/B095NMLM2F
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