The value of bitcoin is always determined by the fiat currency such as the United States Dollar (BTCUSD). Therefore, it is fair to say that they appear almost similar to any symbol trade on the foreign exchange markets. However, they are divergent from the fiat currency because they have no official price. Its values keep fluctuating based on the value of the normal currency. However, at any exchange rate, bitcoin will always trade a higher price than the fiat currency. Besides this, there are lists of other factors that determine the price
Supply and Demand
Demand and supply are what determines the price of bitcoin. Price discovery is the actual meeting point supply from the supply of seller and demand of buyers. Based on the latter, the majority of bitcoin supply is controlled by those who adopted mining during the early days of bitcoin. Those who adopted bitcoin during its early days are considered very fortunate because by now half of the bitcoins have been mined already. Presently, miners obtain up to an average of 3,600 bitcoins in a single day. This is the very same amount that they supply to the market.
Major downside risk
Bitcoin is considered a high-risk asset because it is still a project under experiment. Its price is influenced by very many factors, and this possesses as a risk too. The bitcoin market stands a chance to lose greatly if the government puts a ban or regulations on business enterprises which deal with crypto-currency. Another thing that plays a big role in determining its price is the different development paths within its network. Last on this list is the emergence of competitors with a different but similar kind of crypto-currency but with the back-up of central banking.
Fiat currency crises
It is worth noting that bitcoin wallet is much safer than a bank account. This truth was learned the hard ways a few years ago after Cypriots accounts were confiscated. After the occurrence of this event, there was an upsurge in the value of bitcoin. A crisis on the fiat or the normal currency became a positive influencer of the price of bitcoin. However, whatever happens to the fiat currencies, they will in no way possible be wiped out by crypto-currency. However, bitcoin may be the perfect currency to complement the fiat currency.
When it is all said and done, the chances are that bitcoin is going to have a terrible fate in the end. Ths is not guaranteed but based on what the experts are saying, Bitcoin may end up busting out and leaving its investors in a crisis. The opposite of this statement may also be true.