If you haven’t been informed yet, bitcoin is the first-ever kind of money that is not controlled or regulated by any central body of government, country, or person. This is very different from the case of fiat currencies such as the US dollar, the euro, and the British pound.

Partly because of that, it is quite mind-bending for some newly acquainted to bitcoin to understand what really influences the price of the said digital currency.

In this article we will find out the top factors that influence – both positively and negatively – the price of the currently most popular digital currency in the market.

Factor 1: Supply and Demand

The primary principle that determines the price of bitcoins is the same principle that drives the price of the precious metal gold. That’s the mining cost.

In the case of bitcoin, the prime cost of mining gold from the ground is similar in the way that bitcoin has a minimum price of obtaining new bitcoins by calculating certain equations.

Meanwhile, the demand on the market, awareness of bitcoin, interest in it, trust of actual, potential crypto holders, and a plethora of other factors affect the price among the people who are eager to buy and sell the cryptocurrency.

Factor 2: Bitcoin-related News

Bitcoin is an extremely volatile currency. It goes without saying that news about it affect it high levels, especially the obviously negative items on the news feed.

Once you see negative title about bitcoin, you can get a corresponding movement in its price. Since the currency’s market cap isn’t that big compared to the world’s economy, even rumors on the internet can lower bitcoin’s price.

In practice, on the other hand, negative news can only shatter the first cryptocurrency but not totally destroy it. More importantly, such news can also significantly polarize bitcoin. It’s very much like “bad publicity is still publicity,” meaning such news can enlarge bitcoin’s audience.

Factor 3: Government Regulations

Governments are still having a hard time defining bitcoin in terms of law. It’s still a pending issue for cryptocurrency. On the flip side, the most developed countries like the USA, Canada, UK, and Japan have already come up with laws that regulate the use of bitcoin.

For instance, in Japan, the final resolution about the digital currency in terms of being a legal tender was passed on April 2017. As a result, private entrepreneurs and firms began implementing bitcoin with its decentralized technology in all kinds of spheres.

At present, there are thousands of bitcoin-accepting stores in Japan. This vast bitcoin market has paved the way for a sharp increase in the price of the currency.

Factor 4: Mindset of crypto-investors

Trust plays a very crucial role in the cryptocurrency industry. There are dozens of alternative coins that have functions and features that are more advanced than those of bitcoin. However, bitcoin ranks at the top because it has people’s trust.

As a trader, it is important to pay attention to the prevailing sentiments in the cryptocurrency industry. it is very helpful to study articles, reports, forums, and discussions deeply. That’s how you will be able to grab the overall picture of what’s happening in the cryptocurrency.