What News Affects The Bitcoin Rate And How?

1. What News Affects The Bitcoin Rate And How? With the price of Bitcoin going as high as $60.000 lately, a lot of investors have become interested in the original cryptocurrency. An increasing number of people are flocking the markets in order to buy bitcoin with credit card, among other methods of payment. However, while new investors are happy to participate in this financial revolution, many fail to understand what’s behind these drastic market movements. This misunderstanding of the crypto markets and bitcoin, in particular, has led many investors to lose a considerable amount of their holdings. In this article, we will try to explain the driving forces behind Bitcoin’s price and what type of news in the media can sway the price either way. Understanding these factors will be paramount when investing in the crypto markets. It will allow you to feel out the market sentiment before bing or selling Bitcoin, which should help you minimize losses and maximize gains. What moves the price of Bitcoin? The most important thing you need to understand is that Bitcoin, like any major commodity, is mostly driven by supply and demand. It is one of the most basic economic laws - as supply decreases, while demand goes up, the price of an asset is bound to increase over time. Bitcoin plays in this narrative by having: ● ● ● A limited supply of 21 million coins that will ever be available. A controlled supply provided by miners, which is halved every 4 years. An ever-increasing demand due to mass adoption and increase in popularity of the coin. It’s the news that can influence either the supply or demand of the coin that can have a positive or negative impact on the price of Bitcoin. Types of news that influence Bitcoin’s price Below are some of the major categories of news that can influence the rate of Bitcoin. Regulation news and rumors Bitcoin and cryptocurrencies are still doing their baby steps, in comparison to stocks or commodities. The blockchain technology they are based upon is still in its nascent state, and most countries haven’t figured out how to regulate them yet.

2. Due to their rise in popularity, we are seeing more and more countries trying to impose some kind of regulation on cryptocurrencies. While some governments are quite Bitcoin-friendly, others are not. We’ve seen countries trying to outright ban Bitcoin, mostly because they don’t understand the technology behind it, or because of the general misconception, that crypto is used for illegal activities. Furthermore, even the countries that allow the usage of crypto want to impose some kind of taxation on the profits made from them. This type of news can have a negative impact on Bitcoin’s price as well, depending on the way these new laws are formulated. Important monetary policies updates At the beginning of the COVID19 crisis, humanity quickly found out that our current financial system is quite flawed. To help people in need and jumpstart the economy, major governments injected trillions of dollars into their economies. We can’t deny that these monetary policies might have been a good short-term answer to the economical instability. In reality, printing more money meant increased inflation and diluting the value and shopping power of the FIAT money already in circulation. And in 2021, we saw the US pass a 1.9$ trillion relief bill, while the EU passed a 1.8 trillion euro relief plan. Bitcoin, as a deflationary currency by design, has been the perfect answer to these destructive monetary policies. People around the globe saw Bitcoin as a savior for their savings. Since the beginning of the crisis, investors have been increasingly hedging against this artificial inflation by buying Bitcoin, which has driven the price to new highs. Mining-related news An important factor in Bitcoin’s price is the continuous supply provided by the miners. For instance, an increase in the price of electricity in mining-heavy countries like China can have a serious impact on Bitcoin’s price. If the miners find mining becomes counter-productive, the price at which they are willing to sell newly minted bitcoins will increase. Furthermore, if the demand increases while the miner’s capacity remains the same, the market could be facing a liquidity crisis. This, in turn, should drive the prices up once again. Hype and media coverage Finally, there’s the media coverage of Bitcoin. The more the media mentions Bitcoin, the higher the impact on the price can be. The media can have a double effect on Bitcoin, as it can cause

3. - FOMO - (or fear of missing out) if the news is overly positive, it can cause investors to flock to the markets without any regard for the fundamental value, causing prices to skyrocket. FUD - (or fear, uncertainty, and doubt) if the news is overly negative, it can cause investors to sell off their positions, resulting in a flash crash. - Final words The Bitcoin market is still in its beginnings, which makes it highly volatile and unpredictable. Investors should always remain cautious when buying cryptocurrencies as a simple piece of news or regulation could make prices plummet.