Bitcoin and other cryptos have offered existing and aspiring investors a great investment vehicle. Investors generally have a keen interest in knowing how the price of Bitcoin is predicted to move both in the short term and in the foreseeable future. However, perhaps the only sure thing is that the prices of Bitcoin and those of other digital coins are highly unpredictable. For example, even though the price of Bitcoin reached an all-time high of over $68,000 in November 2021, the price dipped below $35,000 in January 2022. That’s a significant drop. But even with such dips in value, BTC is still worth more than two times as much as it was several years ago. It’s important to understand that such ups and downs are nothing new as far as Bitcoin is concerned. Moreover, even with the volatility of the BTC and the recent drops in Bitcoin price predictions, some experts believe the coin is destined to pass the $100,000 mark. However, there are varying opinions about when that will happen.
Bitcoin price predictions challenges
As earlier stated, predicting Bitcoin prices is not a walk in the park. In fact, no one can authoritatively say they can be sure how much BTC will be worth next week, or at the end of 2022 or in 2023. While looking at Bitcoin price predictions, it would be best to remember that none of the models is 100% right, but that does not mean they are not helpful or unable to offer some insight into what you may expect.
The theories suggested by astute Bitcoin speculators are worth giving a thought. And even more important to note is that because the majority of altcoins depend on the performance of Bitcoin, anyone navigating the world of crypto will greatly benefit from understanding the rationale and limitations of the different Bitcoin price-prediction models.
Luckily, if you want to grasp some of the leading Bitcoin price prediction models, you can try this rich resource with some helpful content on the concept.
Factors that influence Bitcoin’s price
Similar to other investments or currencies, some common factors generally affect the price of Bitcoin and cryptocurrencies. These factors include supply and demand, market events, the news cycle, scarcity, and many others.
However, when looking at Bitcoin price prediction, we need to understand that additional factors affect Bitcoin’s value differently than the average security or currency. This is because BTC is a new and evolving asset.
Below are some of the important factors that impact Bitcoin’s price:
- Mainstream adoption
- Mining cycles
Among the leading factors pushing up the price of Bitcoins is the pace at which users are acquiring and exploring digital currencies. Right now, people are embracing cryptocurrencies at a faster rate than the uptake of the internet. According to a leading expert in crypto, if the rate of adopting digital coins continues, due to the compounding effect of the uptake, the price of Bitcoin could go higher and higher.
From an economic perspective, the value of any asset is proportional to its scarcity, and this is not any different when we look at Bitcoin. At the moment, the number of bitcoins in circulation is between 18 and 19 million, and the minting of the coin will halt at 21 million. According to the industry experts’ consistent view, this inbuilt scarcity of Bitcoin is one of the main things that make it so appealing. The fact that there is a limited supply but a rising demand will drive the price of Bitcoin up, and maybe one of the things that can explain Bitcoin price prediction.
Lately, federal officials have pronounced themselves to be more focused on cryptocurrency. According to the industry experts, the closer attention or what industry insiders refers to as “hawkish” federal regulation can be cited as one of the main factors for the lag in the Bitcoin price. In fact, the bearish sentiments experienced in January 2022 could be attributed to Federal officials’ hawkish attention to the crypto regulation as the Omicron started to register an increase in the US. Another example of the impact of regulation on the price of Bitcoin is China’s banning of crypto in September 2021 which led to investors witnessing a dip in the price of Bitcoin. However, the price has since recovered and gone back to its usual volatility.
The Bitcoin price is also influenced by a cycle referred to as halving. Although it is a complicated process and is all about algorithms, halving is a step in the BTC mining that leads to the reward for the transactions for Bitcoin mining being cut in half. It impacts the entry of new coins into the market, which could influence the value of the existing Bitcoin reserves. Typically, halving correlates with cycles of booms and busts, and some experts attempt to predict these ups and downs up to the day after the conclusion of a halving step.
Bitcoin price prediction is far from a straightforward concept, as you may have seen from the above discussion, and it is hard to correctly tell how the price of cryptos will move in the future. For the average investor, it would be prudent to go for easy investment methods that are easy to grasp than get into cryptocurrency blindly.
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