Bitcoin is the most widely used decentralised digital currency, and its value is influenced by a variety of factors. Its price is not usually regulated by any organisation, group, or government due to the decentralised nature of this currency. Cryptocurrencies are in a speculative bubble; there is no single explanation for Bitcoin's volatility but here are a few possible reasons that may push the price up or down.

Supply and Demand

The sum of Bitcoin traded on exchanges represents a small percentage of the total supply in circulation. Since most Bitcoin is held as savings, it isn't always available for purchase. A scarce asset is more likely to have high prices, whereas one that is available in plenty will have low prices.

Rules and Regulations on Bitcoins

The rapid increase in popularity of bitcoin and other cryptocurrencies has caused the regulators to define these digital assets. If the rules become too stringent or repressive, the value of the cryptocurrency drops. On the other hand, if they are favourable to the crypto industry, they can act as a catalyst for rapid growth.

Media coverage

Media plays a huge role determining the value of Bitcoin. The media can give more people a better understanding of Bitcoin’s basic functionality and benefits of investing on it. This attracts more people to buy Bitcoin. Positive media coverage of Bitcoin will usually result in higher prices, while negative price coverage will have the inverse result.

Competition

Bitcoin is king when we talk about cryptocurrencies. But it's also a fact that a lot of altcoins are getting popular and attracting investors. Digital coins such as Ethereum (ETH), Tether (USDT), Binance Coin (BNB), Cardano (ADA), and Polkadot (DOT) are among its big competitors as of March 2021.

Before investing in Bitcoin or any altcoins, make sure to do your research and know how certain factors can affect the crypto market.

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