What Is Bitcoin and what changes its price ?

Ever since it came into being, Bitcoin has taken the world by storm. From being an upstart, it has clawed its way into becoming a financial powerhouse and trendsetter. Being the so-called king of cryptocurrencies comes with its own problems, though, and the volatility of the market does not make it easy to predict the viability of bitcoins.

In this article, it is our aim to look at the rise of BTC from the very beginning and understand what it is, what influences its price, how it has done in the past, how it is performing now, and how it is likely to perform a few years down the line. So, if you are looking to invest in the market and trade in Bitcoin, want to know whether it is and will remain profitable, and are looking to learn about Bitcoin price prediction, you are in the right place. That said, without further ado, let us get into it!

What Is Bitcoin (BTC)?

Bitcoin is often called a cryptocurrency. This means that it is a kind of digital or virtual currency. This means that no, bitcoins aren’t actual coins. Instead, it is an online version of it which people can use to buy and sell things as they usually do.

Each Bitcoin is a file stored on a computer. Whenever there is a transaction, it is a file that changes hands across smartphones or computers. Every transaction is recorded in a list called a blockchain, which is accessible to everyone. This is useful because if anyone attempts to use bitcoins they don’t own - every file has a unique identifying code - the coins can be traced back and the transaction undone!

Because it is more a collaborative process, the economy of Bitcoin is completely decentralized. There is no governing body that regulates it, like a bank, and BTC was the first to start this trend. Soon, it was taken up, and other crypto assets like Ethereum and Litecoin were created.

Because this is so decentralized, it didn’t take long for investors and traders to flock to Bitcoin. The freedom associated with it is immense. However, by virtue of its very nature, many countries do not allow trade in Bitcoin, and many have even banned it outright. 

Below, we will look at what kind of factors are responsible for determining the price of a single bitcoin.

What Changes the Bitcoin Price 

As of March 2021, the value of a single bitcoin equals almost 47,900 USD. That is a huge rise in value for something that initially cost $0.0008 to $0.08 per coin. However, the BTC value can drop to nothing just as quickly. In fact, the price of a coin slipped 10% just in January of this year.

So, what exactly influences the Bitcoin price prediction? Let us find out.

Supply and Demand

The dual pull of supply and demand has always been responsible for the fluctuation of asset prices historically. The rate at which new bitcoins are produced is controlled via the internal protocol, and if the supply for them rises beyond what is available, the price naturally soars.

Furthermore, there is a cap on just how many coins can be in circulation. As of now, that number is 21 million. After that point, mining will no longer generate new coins. Once that cap is reached, there will be no new coins. Meaning the price can go up or down, depending on how much demand there is and how the competition handles it.

Competition

Speaking of competition, here we are. Bitcoin’s market capitalization has led to many other altcoins coming out. There are hundreds of alternate crypto, which is a good thing because investors get to pick and spread their investments across many products. This keeps prices from rising monumentally. However, since BTC is still the undisputed leader when it comes to market capitalization, most of the revenue goes to it.

Cost of Production

An algorithm generates a new batch of bitcoin every ten minutes or so. Users from the world over compete to solve a complex maths problem in order to be awarded this batch of coins. This is called mining, and the more people involved, the harder it gets to win that batch of coins. And since it is all done electronically, there are costs incurred - namely, electricity.

The cost of electricity for crypto trading and mining is immense,

Availability of Currency Exchanges

Trading is centered around currency exchanges. This is what gives Bitcoin value because if there were nothing to compare it to, there would be no way to judge its worth or even use it for transactions. Several crypto exchange platforms exist, like GDAX and Coinbase, where you can trade BTC for USD or GBP.

Because these exchanges are consistent with their rates, this means that they have a hand in regulating the rate of BTC in correlation to other currencies in order to keep things fair.

Legal Regulations

Due to the bullish penetration of Bitcoin in the global economy, geopolitical bodies have had to take note of it and try to define it. The trouble is that nobody has a classification for it, and thus there is a lot of uncertainty regarding the way it should be categorized and treated.

Due to the legal gray area surrounding cryptocurrencies, this can affect prices in two different ways. Firstly, it gives people who cannot afford Bitcoin access to it, increasing demand. Secondly, powerful investors who make predictions about the value going the other way can make bets on the parabolic uptrends and downtrends.

Pitfalls of Self-Governance

Every decision demands community consensus. Meaning that even small issues like software updates can take a long amount of time.

As an example, currently, BTC software can handle only about three transactions per second. When demand was low, this wasn't a problem. However, as the numbers of users increase, disgruntled and frustrated users can rally behind competitive services in protest, driving prices down.

Bitcoin Price History (2011-2020)

Bitcoin is pretty big now, but it wasn’t always the case. Its history has been torrid and complicated, to say the least. And thus, in this section, we will take a detailed look at the road Bitcoin took to get here, all the trends, forecasts, and bull runs. So strap in. It’s going to be quite the ride.

The first time Bitcoin had a considerable price hike was in 2011. In April of that year, the price of a coin was $1. By June, this had jumped to $32. This was a huge leap but was soon followed by a recession in crypto markets. This led to the price of coins dropping to $2 apiece by November. This streak of bad luck led into the next year, with the price staying around $4.80 in May and rising to $13.20 in August.

Things got exciting in 2013. Beginning the year at $13.40, the price rose sharply to $220 by the beginning of April. As per anticipation, the prices proceeded to fall off a cliff and were down to around $70 by the middle of the month. However, The optimistic were rewarded as another bubble formed, taking the price from $123.20 in October to %1156.10 in December. Then again, it fell to $760 three days later.

This was followed by a depression that lasted a good few years, with the price hitting a low of $315 at the beginning of 2015. Things picked back up again in 2017. BTC spent the first two months in a decline, but then, in an upswing, no specialist could have anticipated in any forecast, the price hiked from $975.70 in March to $20.089 in December.

This is the trend that brought the mainstream spotlight on Bitcoin. This is what led scores of analysts to start speculative predictions about wild price hikes, as well as the creation and dissemination of alternate cryptocurrencies. The boom had begun.

Or had it? Despite the hopes for another bubble, BTC instead stuck to the indicators and grew laterally for the next couple of years. Of course, this did not mean there was no activity. In June of 2019, the price again surpassed $10,000, but it had fallen back to $7,112.73 by December of the same year.

By then, the Covid situation had started to spread from one corner of the world to another. Countries went into lockdown one by one, and many financial and economic markets started experiencing a downfall. However, it was also the time to come alive. Though it started the year at $7,200, by late November, this price had gone to over $19,000.

Whether it be because of the government policies that struck fear into the hearts of investors across the globe, or the stimulus checks of $1,200 that breathed new life into the stock exchange and other markets, it is no secret that the asset had a good 2020. Not only did it come out of a low, but it beat its previous all-time high to set a new record.

Because of the fears of inflation and reduction of value of the US dollar, many institutions also decided to buy into Bitcoin, propelling it to never-before-seen heights. In fact, in December of 2020, the value of Bitcoin was just under $24,000. From the beginning of the year, that meant an increase of value by 224%.

How Is Bitcoin Doing in 2021?

The story of ups and downs remains much the same in 2021. On January 14th, BTC would break its previous record and rise to be valued at about $40,111. This made a lot of people very happy for a grand total of three days, after which its value slipped back to $30,525.39.

However, there was good news awaiting those who hedged their bets on this crypto, making a comeback. On February 16th, 2021, Bitcoin hit a record high of $51,735.38. By February 21st, it had risen again to $57,432.12. It was a spectacular few days of rising, followed by a natural slump. As of March 5th, it had settled back down to $48879.20

Short-Term Bitcoin Price Prediction Chart for 2021-2022 

Given just how difficult it is to formulate the myriad rises and pullbacks that run rampant in the world of crypto, it demands expert analysts to do the groundwork and set the template for laymen to understand the trends that Bitcoin is liable to take in the coming years. Only when you have an idea of what is likely to happen can you make a strategy about how to navigate the waters.

However, allow us to reiterate: this is just a prediction. The volatility of the market cannot be taken lightly. Accept this Bitcoin price prediction chart with a grain of salt.

Month	Open	Min-Max	Close	Total%
2021
March	46334	39400-55065	49987	7.9%
April	49987	45432-57602	51170	10.4%
May	51170	51170-63512	59357	28.1%
June	59357	59357-71243	66582	43.7%
July	66582	66582-82641	77235	66.7%
August	77235	77235-95865	89593	93.4%
September	89593	89593-111203	103928	124%
October	103928	88463-103928	95122	105%
November	95122	92209-106089	99149	114%
December	99149	99149-123064	115013	148%
2022
January	115013	103395-118959	111177	140%
February	111177	111177-130152	121637	163%
March	121637	121637-150976	141099	205%
April	141099	110226-141099	118523	156%
May	118523	100706-118523	108286	134%
June	108286	108286-134405	125612	171%
July	125612	111653-128461	120057	159%
August	120057	93789-120057	100848	118%
September	100848	100848-118870	111093	140%
October	111093	89256-111093	95974	107%
November	95974	85160-97980	91570	97.6%
December	91570	79787-91797	85792	85.2%

Bitcoin Price Prediction 2025

As far as we know, the fourth halving is set to take place in 2024, meaning that there is a high possibility of prices spiking in 2025. There is a chance for it to reach $100,000 and keep growing until it equals about $400,000 in value.

Experts have used Fibonacci extensions, the Mayer Multiple approach, as well as the NVT, to come to this conclusion. Of course, there is always space for inaccuracies when it comes to Bitcoin price prediction 2025, so always keep that in mind.

Bitcoin Price Prediction 2030

By 2030, most of the available BTC will have been mined. This rules out the possibility of supply and demand affecting the price. However, what will affect the price of a coin is whether or not it is accepted and regulated by various bodies.

Furthermore, by then, millennials and Gen Z will be doing most of the trading. Having grown up in a digital world, they will prefer digital assets over land and commodities, meaning that Bitcoin will be even more widely adopted than it is now.

All the projections and graphs show a very positive trend for Bitcoin in the coming decade. That means that more people are likely to adopt it. If this happens, Bitcoin price prediction 2030 can safely say that the price of a single coin will reach or exceed $1,000,000.

Bitcoin Price Prediction 2050

When making long-term predictions far into the future, the fact is that nobody truly has any idea what is going to happen. There are way too many variables that can come into play to have concrete answers of any kind. The market could crash, Bitcoin could cease to be, the world may end. Who knows, right? So what can we say with confidence?

There are two possibilities that seem likely. The first is that governments the world over will pass laws and regulations that will put a stranglehold on the power and value of Bitcoin. As it is, it operates in a legal gray area, and that could change any day. This could lead to the value of a single coin tapering off to the double or triple digits. We could be back at the times when a coin was worth ten or a hundred dollars, maximum.

The other possibility is the widespread acceptance and regularisation of Bitcoin the world over. This is much more likely as things stand today, and if it happens, the value of BTC could easily shatter all ceilings and raise the price to millions of dollars. The market cap will be shooting off towards trillions in USD.

The only constant in life is change, and that adage seems like it was made for the crypto business. We will only know what happens when it happens, and the only thing that we can do is be optimistic about Bitcoin price prediction 2050.

How To: Technical Analysis for Bitcoin

When confronted with the pains of Bitcoin price prediction, using technical analysis must seem like an impossible task. It is our job here to tell you that this is not the case. In fact, we will explain to you what it takes to involve technical analysis in your effort to make sense of the market. Let’s get started!

The DOW Theory

For the most part, technical analysis hinges on the properties of something called the DOW theory. Let’s familiarize ourselves with these first!

• When you see the price of something in the market, you can safely assume that anything affecting the rise and fall of it has already been factored into that price. Everyone is similarly informed about the levels of supply and demand, legal regulation etc. - the factors that affect price rise, so the price is almost always an accurate representation.
• Not everything is random all the time. In most cases, if there is a trend towards a certain direction, the chances are good that it will keep going the same way. The momentum stops random changes from occurring.
• You need to focus on the what’s over the why’s. It matters less why a certain price changed. What matters more is whether the symptoms stay the same.
• Trends never learn from history, and they are bound to repeat. At the end of the day, it is humans who shape the world, and human psychology does not change overnight. Therefore, if two events are similar, it is possible that the outcome will likely be the same.

That wasn’t so hard, was it? Now that you have a handle on the DOW theory, let’s dig a little deeper into the kinds of things you want to be on the lookout for when it comes to technical analysis. 

There are four pieces of information you need to know. They are:

• Ride the trend. Yes, the market is volatile and ever-shifting, but there are trends and directions of movement you can pick up on. You need to be able to identity uptrends and downtrends and identify what they mean in the short, medium, and long terms. Once you have a handle on that, you can predict where the buck will stop and make more profits.
• Use a method called moving averages to decide what kind of trend is expected over a certain period of time. You take all the fluctuations you predicted and find the overall average. Whether positive or negative, that shows you the trend that is likely to happen. There are two kinds of ways to do this - simple and exponential moving average.
• Using support and resistance. Support is a situation where traders feel like it is okay to buy bitcoin because they can sell it for higher. This creates a demand for that price and stops sharp falls from happening. On the other hand, there is resistance, where traders feeling that something is overvalued start selling, meaning prices can’t rise beyond that point. Prices bouncing between support and resistance levels make for a break from volatility, but when they do break, it means the formation of a new downtrend or a price rise.
• Volume represents the number of traders making trades. A volume means that more traders are making the same decision, while low volume means the exact opposite. The safe thing to do is go with what most of the others are doing. High volume trades are usually safer. A few stray traders can make big trades to make the price go up if you join in this bull run, the few who started this can simply sell at a higher price and make profits. Therefore, make sure the volume is high before you make a commitment.

Long-Term Bitcoin Price Predictions from Experts

In this section, we will bring to you what experts think the BTC value will be in the long run. Even if we cannot use some form of an automated algorithm to make Bitcoin price prediction for us, we can still make educated guesses. Or, we can take the educated guesses of experts in the field and use them as a stepping stone towards making our own. So, without further ado, let us look at what these famous people have to say!

Winklevoss Twins: BTC Will Rise to $500,000 by 2030

The Winklevoss twins - the famous Bitcoin billionaires - have said Bitcoin has the potential to reach a price of $500,000 by 2030, which would put its market cap on par with that of gold, which is running at around $9 trillion.

Tyler Winklevoss said, “Our thesis is that Bitcoin is gold 2.0, that it will disrupt gold, and if it does that, it has to have a market cap of 9 trillion, so we think it could price one day at $US500,000 of Bitcoin.”

If you want to know more, you can visit their website to read their blog post in detail. They explained their methods and thought processes very well.

Mark Yusko: Bitcoin Will Be Equal to $400,000 in the Future

Mark Yusko is a billionaire investor and Founder of Morgan Creek Capital. His prediction for Bitcoin is that it’ll be worth over $400,000 in the long term, a statement that seems like it might be closer to reality than most people are willing to give it credit for.

“It’s just math. It is gold equivalent… there are about 20 million Bitcoin available today. Gold today is about $8 trillion. That gives you $400,000. And that doesn’t include use cases that relate to currency,” he said.

Trading vs. Investing in BTC

At the end of all that, we come to the final question - what should you do with Bitcoin? Should you invest in it? Or should you trade?

There are arguments for both. With the next halving coming up, prices are set to hike once more. This makes it attractive for investors to get in on the action. On the other hand, trading in Bitcoin has always been a very active market and continues to thrive. What you chose to do with your bitcoins depends mostly on what you want. Do you want to speculate, or do you want to be in the trenches?

In the end, it is a very personal decision. Whatever you choose to do, you must never forget about the risks associated, as well as the alternatives. Particularly, Bitcoin CFDs. These instruments allow you to tap into the benefits of Bitcoin trading without having to physically own the coin itself. Unlike with investing, you will be able to take advantage of price fluctuations in the short term. To start off your journey, create a free demo account on Libertex!

Why to trade with Libertex?

• access to a demo account free of charge
• technical assistance to the operator 5 days a week, from 8 a.m. till 8 p.m. (Central European Standard Time)
• leverage of up to 1:600 for professional сlients
• operate on a platform for any device: Libertex and Metatrader

FAQ

So, let's quickly address some of the most pressing questions you may have after reading this article. Little things can get lost in the shuffle, but we hope to answer most of your queries in this section.

Is Bitcoin a Good Investment in 2021?

Bitcoin is an excellent investment in 2021. The prices are on the rise, and it remains competitive and exciting.

Is Bitcoin Worth Buying?

Absolutely. As long as you are aware of the volatility surrounding cryptocurrencies and trading in general and know how to navigate the waters, BTC makes for an excellent asset.

What Will Bitcoin Be Worth in 2025?

As projected, Bitcoin will be worth around $400,000 by 2025.

Can You Predict Bitcoin Price?

To an extent. The volatility makes it difficult, but there are ways to predict the price of Bitcoin. You need to study the market and use some technical analysis elements - which require practice - but yes, you can.

What Will Bitcoin Be Worth in 2030?

Experts predict that the price of Bitcoin can reach up to $1,000,000 in 2030 if trends continue as they are.

Will Bitcoin Ever Die?

There is always a chance that Bitcoin will crash and burn. It all depends on the regulations passed by governments and if they decide to wring the life out of crypto.

Can Bitcoin Reach 100k?

Yes, BTC can reach $100k. In fact, it is predicted to do so by 2022.

Can Bitcoin Reach Zero?

It can. As we said before, it depends on the kinds of policies governments pass. If they decide to restrict it, Bitcoin can definitely go from hero to zero in a matter of days.

Is It a Good Time to Buy Bitcoin Now?

It is indeed. With the fourth halving on the horizon, prices are set to rise once more, making it a great time to buy BTC.

Does Bitcoin Have a Future?

It does. Unless governments crack down on it, Bitcoin is set to have a bright future and consistent growth.

Will Amazon Take Bitcoin?

No, Amazon does not accept BTC as payment yet.

Why Is Bitcoin Going So High?

The market is always affected by a few dozen things. You need to properly research the trends guiding the volatility to know what is causing the uptrends and downtrends at any given moment.