Like most cryptocurrencies, their price has fluctuated since the creation of Bitcoin (BTC). Between falling and recovering markets, investors are on the alert all the time as there seem to be crypto assets on a rollercoaster ride. But what is the basis of those changes? Discover these four reasons that account for 88% of the variation in BTC price.
Bitcoin stock and technology volatility
The price of bitcoin is influenced by several factors. As an unstable asset, many events can affect their price. Since the creation of cryptocurrencies, the majority of investors have turned to this sector. Bets and a potential source of many gains, the negotiators quickly took them, making them famous at the same time. However, some ignored its instability.
Like all crypto assets, bitcoin is known for its volatility. Therefore, today’s high price may fall tomorrow. This is one of the main factors behind the variation in BTC price. Investors often want to make gains but forget that any investment involves risk. Currently, the price of bitcoin is down almost 70% from the all-time high of November 2021. And this is not the first time the market has been bearish. However, thanks to the volatility, it usually reverts to green.
Bitcoin is also taking advantage of the historical volatility of technology stocks. Unlike stocks, bitcoin (BTC) trades cheaper. In fact, the proxy wallet corresponding to bitcoin alone is about $ 82,000 for the Nasdaq 100 index, $ 50,000 for borrowed gold and $ 21,000 for borrowed money. So, if considered on this basis, the proxy wallet stands at $ 25,000 compared to bitcoin which is currently trading at $ 19,259.
General market weakness and the price of gold
Apart from the volatility of tech stocks and bitcoin itself, there are many other factors that greatly influence the price of bitcoin. Among other things, the correlation between bitcoin and the price of gold. Many people think that this correlation should be positive since bitcoin and gold are often used to store value that is not affected by inflation. However, bitcoin (BTC) and gold are two contrasting solutions to a lack of confidence in the currency. Therefore, when other factors are taken into account, the correlation between these two assets becomes very negative.
Just like options, the price of bitcoin rises when the market is volatile. So, overall market volatility can be an advantage for the first crypto. The Nasdaq index plugin is currently worth $ 8,000. If index volatility increases by about 50%, the price of bitcoin could increase by almost $ 4,000.
However, if the opposite happens and index volatility falls below 50%, the price of bitcoin could also lose value according to Aaron Brown. Because of this, market movements affect the price of bitcoin in different ways. They have already appeared at work during the 2018/2019 bear market. But also during the last six months. Just as they allow prices to rise, they can also create a downtrend.
The price of bitcoin has been influenced by many factors since its inception. Over the past four years, four major factors have accounted for 88% of the price variation on the leading cryptocurrency.
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The world is changing and adaptation is the best weapon to survive in this turbulent universe. Basically as a crypto community manager, I am interested in everything directly or indirectly related to the blockchain and its derivatives. To share my experience and share an interesting field for me, there is nothing better than writing informative and reassuring articles at the same time.