What influences the bitcoin price in 2025 - factors, main reasons
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Bitcoin is the first cryptocurrency, which is why it is considered the most famous, sought-after and promising. However, it has not yet become a substitute for global fiat currencies, and there is a reason for this – extremely high volatility, i.e. versatility of the exchange rate.
In this article, our editors will analyze what the Bitcoin exchange rate depends on, what factors cause its value to rise and fall sharply, sometimes by several percent per day.
BTC Fees Chart
Why will the price of Bitcoin change?
Classic market laws related to supply and demand apply to BTC:
When demand is high and supply is low, prices rise.
When demand is low and supply is high, prices fall.
Bitcoin has gained widespread adoption among traders and investors, and millions of speculative transactions are made with it every day. As a result, its price fluctuates constantly, especially as large investors enter the market with multi-million dollar trades.
There is an indicator that assesses market sentiment – fear and greed index. Determines how much investors are currently inclined to buy or sell an asset and helps choose the timing for a transaction.
Thus, it remains to be seen why exactly the relationship between supply and demand changes and why these parameters are so unstable.
Factors that influence the Bitcoin exchange rate
Bitcoin in El Salvador
1 News History, Cryptocurrency Adoption in the World
Bitcoin Summer 2021 became official competition in the Central American state of El Salvador. This is the first precedent in history. El Salvador has problems with the economy; many citizens go abroad to work. To make it more convenient and profitable to transfer profit money to the country, we have created this solution. El Salvador has not had its own national currency since 2001, so the second official means of payment is the US dollar.
El Salvador's move had a major impact on Bitcoin's exchange rate. In November of the same year, the first cryptocurrency reached an all-time high of $69,000.
This is just one example of how news affects BTC. There are many such examples, starting with the ban on cryptocurrencies in China, which brought a real crisis to the cryptocurrency market, and ending with rumors in 2017 that a Chicago broker would add futures for Bitcoin – thus, in December, the cryptocurrency rose to almost $20,000, although in the middle of the same year it cost only about $2,400.
Bitcoin Mining Difficulty
2 Difficulty and cost of mining
Let us remember market forces again – the price of a product is always influenced by its cost. Similarly, the price of Bitcoin in the cryptocurrency market is closely related to the costs of its production.
The cost of BTC is the approximate sum of infrastructure and electricity costs, as well as overhead costs, depending on the mining difficulty.
In the mining process, miners compete to solve a complex mathematical problem. The first one to solve it receives a reward in the form of new bitcoins + transaction fees accumulated since the invention of the previous set.
Computing power is used to solve the problem. That is, specialized and expensive equipment (ASIC). This also means paying significant electricity bills.
Approximately every two weeks, the Bitcoin mining difficulty is unintentionally adjusted by the network so that blocks are mined not too quickly and not too slowly, but approximately 10 minutes each.
As a result, all these factors greatly influence the price of the asset. It doesn't make sense for miners to sell a coin very cheaply if they spent so much to produce it. It is more logical for them to wait for better times when the exchange rate rises.
Bitcoin Halving
3 Reduce by half
Halving Bitcoin – an event that happens on the network every four years (or 210 millennium blocks).
A halving is a process where the reward for mining a pool is reduced by half. There have been three such halvings to date, the last one in May 2020. While miners initially received 50 BTC per pool, they now receive 6.25 BTC.
This creates a very interesting situation: it took four years to mine half of all bitcoins, and the remaining half will take almost 120 years to mine.
Halving always has a positive impact on the exchange rate, although not immediately. The reason is quite logical: the flow of new coins into the market is decreasing, and demand is increasing. As a rule, tangible results of halving appear six months to a year after the event.
Investing in Bitcoin
4 Institutional investors
Bitcoin’s growth in 2021 is believed to have been more influenced by institutional investors, who have suddenly started to show greater interest in this type of asset. At the same time, Bitcoin is considered by many to be a safe haven asset that can protect savings from inflation and at the same time grow them.
Here are some examples of several large companies investing in BTC:
Microstrategy
Shades of gray
CoinShares
Terreiro Inc.
Tesla
Galaxy Digital Holdings
Bitcoin Magazine Analysts obvious that institutional investment in Bitcoin has nothing to do with profit, but with a mindset. Investors trust Bitcoin as a store of value and a hedge against financial uncertainty.
Of course, this cannot be said about all investors, for example, Nassim Taleb, author of the bestselling book “Black Swan”, has written many angry tweets about Bitcoin and called it a “total failure”, which is not entirely fair.
Bitcoin Competitors
5 Competition
While Bitcoin is the first cryptocurrency, it is no longer the only one. The first altcoin (called Namecoin) appeared in 2011. Now this project is no longer operational, but thousands of others are.
And almost all of them bring or try to bring something new to improve existing solutions. Some are focused on improving transaction speed, others on working with smart contracts, others on convenience for everyday payments, etc.
So far, no competitor has managed to significantly displace Bitcoin from its leading position, although some of them have become very, very successful, for example, Ethereum.
The cryptocurrency market is characterized by a periodic “change of seasons”. During the altcoin season, Bitcoin is quiet or in decline, while alternative coins are actively growing and vice versa. You need to take this into account and learn to use it.
Where to track the Bitcoin rate
Current BTC rate presented on our website. By the way, you can track it using cryptocurrency exchanges and monitoring:
The more popular the broker and the better its liquidity, the more realistic the exchange rate will be. In fact, the rate is always displayed in the wallets where the currency is stored.
Where to buy and store BTC
Bitcoin is traded through several services, from which you need to choose the most convenient and profitable one for you:
For storage, the most reliable option is a hardware wallet (Ledger, Safe, SafePal, Maintenance key, Legal wallet, Bitcoin etc.). The most secure software wallet is Core Bitcoin for computer. But it is not very convenient because it requires downloading the complete blockchain. Maybe it is considered Trust wallet, Exodus and other lightweight storage for mobile or desktop devices.
Frequently asked questions
What is Bitcoin volatility?
The versatility of the exchange rate over a certain period of time, its increase or subtraction.
What explains this?
The relationship between supply and demand, which in turn depends on many factors.
How does news affect the price of Bitcoin?
Positive news about Bitcoin's worldwide approval often causes the currency to rise as credit on it increases. On the other hand, bans have a negative impact on value.
What is halving?
Bitcoin pool reward halving, which occurs approximately every 4 years.
What is the mining difficulty?
Indicator by which the speed of obtaining new blocks is regulated. Always adjusted so that one set takes 10 minutes to take off.
Why do big investors buy BTC?
To protect their assets from inflation. Some also do it for the theory, believing that cryptocurrencies are the future.
Where can I follow the exchange rate of a currency?
On our website or on third-party aggregators, brokers and wallets.
Conclusion
Based on the listed factors that influence the price of Bitcoin, its volatility becomes quite clear. News appears every day, the difficulty is adjusted every two weeks, competitors appear almost incessantly and are actively developing, and more and more new investors and traders are entering the market. It remains to carefully explore the situation if you intend to invest In Bitcoin, learn the basics of technical and fundamental analysis, develop a strategy that helps minimize possible losses.
