Factors Influencing The Price Of Bitcoin

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Factors Influencing The Price Of Bitcoin
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You might be knowing all about Bitcoin, but ever
thought about the factors that determine the
price of Bitcoin. If not, then today, we will let
you know it. By asking any cryptocurrency
advisors, they will make you understand how
Bitcoin is much different from buying a bond or
stock.
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• Other than investment in traditional currencies,
  it is not the case with Bitcoin, as it is a
  decentralized currency which eliminates the role
  of a central authority like a bank or government.
  
• So now it gives a clear understanding that no
  inflation rates or monetary policy apply to
  Bitcoin. Instead, the price of Bitcoin is
  determined by other factors.

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Factors Influencing Price Of Bitcoin

• The factors which influence the price of Bitcoin
  are
• Competition with rival cryptocurrencies
• Rewards being issued to miners
• Influence on the supply of Bitcoin
• Sales being governed by regulations

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Competition With Rival Cryptocurrencies
No doubt, Bitcoin is the most popular and
well-known cryptocurrency, but that doesnt mean,
it is free from competition from other rival
cryptocurrencies. Even though it is still a
dominant digital currency in market
capitalization, still there are altcoins like
Litecoin, Ether, EOS, XRP and Bitcoin Cash that
have become its closest tough contenders by the
year 2020.
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Rewards being issued to miners
Bitcoins are virtual currencies and are produced
products incurring real production cost. So far,
electricity consumption is known to be its major
factor. Bitcoin mining depends on a complex
crypto mathematical problem, which is solved by
the miners. The first one to find gets rewarded
with a block of new-minted Bitcoins.
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Influence on the supply of Bitcoin

• It is one of the reasons which influences the
  price of Bitcoin. Two ways which influence
  Bitcoin supply. Firstly, the fixed rate of newly
  created Bitcoins allowed by the Bitcoin protocol.
• The introduction of new Bitcoin in the market
  happens when the miners process the blocks of
  transactions. Also, the rate during the
  introduction of the new coins gets slow by time.
  Secondly, due to the existing number of Bitcoins
  allowed by the cryptocurrency eco-system does
  impact the supply.

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Sales being governed by regulations

• Since Bitcoin does not allow any interference of
  central authority, so it is completely depended
  on miners and developers for the processing of
  transactions and safety of blockchain network.
• It is because it takes too much time to resolve
  fundamental issues. Thus the community is divided
  for the betterment to increase the transactions.
• Now these forks are divided into two types, Soft
  forks and hard forks. The difference between
  these forks is that soft forms do not lead to any
  changes in the creation of new cryptocurrency,
  whereas hard forks are the opposite of the former.

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Conclusion As you can see in the current year
2020, many of the altcoins, including Ether,
Litecoin, Bitcoin Cash, XRP and EOS have become
its closest competitors. So this can be one of
the major factors that influence the price of
Bitcoin. Following other factors are the
influence of supply, rewards given to miners and
the sales being governed by the regulations.
Sources https//www.cryptoknowmics.com/crypto-
advisors
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