Bitcoin began this 2022 with economic measures that, although they are not from the digital environment, made its value decrease, even reaching less than half of its highest price in November 2021.Many factors such as the increase in interest rates in the United States and future restrictions of Russia on mining of bitiq have even promoted the sale of this important crypto asset.
Why does Bitcoin lose its value?
Unlike the traditional economy, Bitcoin does not allow its value to be manipulated by third parties in the case of central banks.
Bitcoin works under the blockchain platform. Therefore, the miners are the ones who, with their maximum potential in terms of knowledge and computing management, are in charge of recording all daily operations in the blockchain log book.
The banking entities worldwide are the ones that control the outflow and inflow of money, as well as the control of the inflationary index through its increase or decrease, making use of financial tools such as interest or bonds.
Against all these barriers imposed by the traditional market, Bitcoin has tried to maintain its value by using a set of protocols and strong forks, relying on a myriad of external factors.
At the time of investing, all futures traders of contracts for difference or CDF of Bitcoin take into account these and many other factors to take a position before the cryptocurrency exchange market.
The cryptocurrency that does characterize by its ups and downs
The percentages of variation in the price of Bitcoin have been highly variable, going from increases of up to 225 percent to decreases from one month to another of around 40 percent.
Although many fear this volatile market, this is not to say that it is a reason to withdraw; it is simply essential to consider it a precaution before investing any capital in digital currencies.
Some of the factors that directly influence the value of Bitcoin do explain below.
- Demand and Supply
It is the essential factor that influences the value of Bitcoin as it happens in the traditional market where the economic theory does base on the balance and the displacements that occur around the supply and demand of a specific good or service.
The same thing happens around digital currencies; their purchase and sale directly influence the price of the various cryptocurrencies. The offer does base on the mining process, where the miners successfully solve the crossword of computer protocols.
This process allows them to obtain bitcoins and increases the supply; in turn, this supply generates more significant interest in investors, which causes the price of Bitcoin to rise through the demand generated.
- The impact of the media and social networks
It has been shown that the more people talk about Bitcoin, the more interest it generates in people to invest; that is, an increase in the price of Bitcoin is structured based on positive opinions.
On the contrary, negative opinions contribute to the fall of Bitcoin prices, in many cases in a high percentage.
Not only are the media the ones that influence the opinions of cryptocurrency corporations, but investors also influence the price more if they encourage payment, knowledge, and investment, even causing prices to skyrocket.
- Political Events
Just as the political environment often influences the world economy, cryptocurrencies do not escape being vulnerable to political events.
Unlike the traditional market, when an event of a political nature affects a country’s economy, people choose to invest in cryptocurrencies since they find confidence and a way to keep their savings safe.
- Changes in government regulations
Due to the novelty of the concept of Bitcoin as an alternative digital currency in the face of crises, states, and central banks often do not know how to manage and adopt them.
As this digital currency is not related to any government, the measures they take can affect the operation of the Cryptoactive system, as long as they involve the digital currency causing increases and decreases in its prices.
All these references make us think that the digital market that operates under these digital or virtual currencies is led by Bitcoin whenever their price is negatively affected.
Some event occurs that gives them the strength to shoot up their value, generating profits for the new investors and veterans.