If you are a Bitcoin trader and indeed are looking to profit from the extreme price rise and fall of Bitcoin to make a profit, Bitcoin's fluctuating price is definitely very much anticipated. But, this will be different if you only use Bitcoin only for transactions like regular money.
Bitcoin prices are rising and falling sharply it has become the daily conversation of bitcoin players throughout this beautiful universe. What are the things that cause bitcoin prices to go down sharply?
News spread widely
As a simple example, when an item, such as red onion at this time the amount of stock is actually quite a lot. However, with news of rising fuel prices, the predicted dry season that will happen long enough and the issue of unavailability of existing stock, the price of onion will rise as high. And the cause is just "a news".
Same with bitcoin. Bitcoin is a new currency that is expected to change the world's financial system. From deals on gambling sites, Terrorism, ISIS and other news to the capture of bitcoin creators in Australia. Bitcoin more often gets bad news. When there is news that there is a billionaire who will invest some conventional money, in this case Dollar and friends, then the price of bitcoin will rise instantly. Similarly, when there is news that ISIS will use bitcoin as a means of buying weapons, it also makes bitcoin prices will creep up and will soon be hunted by traders to play the market.
However, when bitcoin strikes bad news, such as the arrest of Sathosi Nakamoto, the creator of Bitcoin in Australia, this issue has made many bitcoin users unload the bitcoins simultaneously, resulting in the price falling unexpectedly.
The decrease of bitcoin price is caused by the lack of Bitcoin stock in the network.
As the law of economics, the fewer the goods, the goods will rise, but if the quantity of goods available is sufficient, then the price will decrease. This also applies to bitcoin prices. Currently, Bitcoin's existing stock in the network is still relatively small, at 14.8 million Bitcoin in November of 2015. This is certainly much different from the total US dollar in circulation, which is 1.34 trillion USD in September. And this is still added to the existing bitcoin factor is not fully used for transactions by users. There is another case that there is a hardrive that stores quite a bit of bitcoin inside, but users forget to private key. This will obviously reduce the amount of bitcoin in circulation. In these circumstances, if someone is buying a bitcoin on a large scale, then the bitcoin price will soar to the blue sky .
The situation where bitcoin sellers are more than bitcoin users
In general, the current bitcoin owner is a trading and investing player and is not used to actually transact like to shop for everyday necessities in moderation. This is because there are still few shops or both online and offline who receive bitcoin as a means of payment.
You as a bitcoin player may be able to easily make transactions using bitcoins, but not for those who do not understand at all the language of bitcoin technology is quite complicated. This is why bitcoin is still rarely used for trading and selling, but only as an investment tool and many people choose to sell bitcoin to make a profit from using it for shopping.
As a result, when bitcoins are high, traders will sell the bitcoins simultaneously, so the price drops dramatically again. Panic sell and panic Buy situation often occurs due to different views so this makes bitcoin price has a very high fluctuation rate.
Fraud
Bitcoin is a currency that allows users to transact anonymously, or without identity. That's why sometimes bitcoin often gets bad news like for example money laundering of corruption, gambling and so on.
With the possibility of transacting without an identical identity in a conventional bank, the use of bitcoin becomes very prone to fraud or scam. Many billionaires use their assets in the form of bitcoins with the lure of profit or profits that multiply. In general, the current bitcoin owner is a trading and investing player and is not used to actually transact like to shop for everyday necessities in moderation. This is because there are still few shops or both online and offline who receive bitcoin as a means of payment.
You as a bitcoin player may be able to easily make transactions using bitcoins, but not for those who do not understand at all the language of bitcoin technology is quite complicated. This is why bitcoin is still rarely used for trading and selling, but only as an investment tool and many people choose to sell bitcoin to make a profit from using it for shopping.
As a result, when bitcoins are high, traders will sell the bitcoins simultaneously, so the price drops dramatically again. Panic sell and panic Buy situation often occurs due to different views so this makes bitcoin price has a very high fluctuation rate.
Fraud
Bitcoin is a currency that allows users to transact anonymously, or without identity. That's why sometimes bitcoin often gets bad news like for example money laundering of corruption, gambling and so on.
With the possibility of transacting without an identical identity in a conventional bank, the use of bitcoin becomes very prone to fraud or scam. Many billionaires use their assets in the form of bitcoins with the lure of profit or profits that multiply.
Technical aspect of the coins do play a part in the dip and rise of a particular coin.
Bitcoin and Bitcoin Cash for instance. Over the past weeks, both BTC and BCH has been readjusting their difficulty level. This resulted in miners jumping back and fro both coins.
As the coin is being readjusted to be easily mined, increasing the profitability of that particular coin, more miners would then hop on the opportunity and mine the block.
Taking last week for example, the mining difficulty of BCH has been reduced due to the time taken for each block to be mined to have gotten longer, this readjustment has given miners the opportunity to profit more from BCH, therefore I believe that it is part of the reason for the huge pump on BCH to $800~.
I'll love to touch on the difficulty aspect on crypto mining more, but that will take more than just a comment.
Good work on the post!
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We need to do as a miner is to be patient and do not rush by lust.
thanks @jakeglengin
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Thanks for the post @intan. For those of us still grappling to understand this new world of cryptocurrency, posts like these are very helpful. Upvoted and following
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post yang sangat bagus @intan
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thanks @filzaart
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thank again @intan
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Great explanation! Thank you for sharing!
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