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Traders and investors consider several factors when performing Bitcoin's fundamental and technical analysis. Here are some of them.
Bitcoin, the world's first and most widely-traded cryptocurrency has seen a lot of ups and downs over its 10-year history. From its early days, when people considered it an underground phenomenon favored by criminals and tech enthusiasts, to its current status as a mainstream financial asset with a global following, Bitcoin has come a long way. You may visit https://allin1bitcoins.com list of platforms for reviews, comparisons, and financial news.
Looking back at Bitcoin's price history, we can see that the cryptocurrency has experienced several sharp rallies and corrections. In 2013, for example, Bitcoin's price surged from $100 to $1,000 in a few months before crashing down on Earth. Similarly, in 2017 Bitcoin's price soared past $19,000 only to fall below $3,000 a year later.
What's driving Bitcoin's price movements? In this article, we'll look at the fundamental and technical factors that have contributed to Bitcoin's price swings in the past and could continue to do so in the future.
Bitcoin's Fundamental Factors
Bitcoin is often said to be a product of the 2008 financial crisis, and there's some truth. The white paper that proposed Bitcoin as a decentralized electronic cash system was released in October 2008, just a few months after Lehman Brothers filed for bankruptcy and the global financial system began to crumble.
It's not surprising that many people see Bitcoin as a way to protect themselves from inflation, which erodes the value of traditional fiat currencies like the US dollar. When central banks print more money, each unit of that currency becomes worth less, which has historically been one of Bitcoin's key selling points.
Another fundamental factor that contributes to Bitcoin's price movements is its supply. Unlike fiat currencies, which central banks can print at will, there will only ever be 21 million Bitcoin. This finite supply gives Bitcoin a built-in scarcity that other cryptocurrencies don't have, and it's one of the main reasons people see Bitcoin as a store of value similar to gold.
Finally, Bitcoin's popularity and adoption play a role in its price movements. As more people use and invest in Bitcoin, the demand for the cryptocurrency increases, driving up its price. Conversely, if Bitcoin falls out of favor with investors or users, its price will drop.
Bitcoin's Technical Analysis
In addition to the fundamental factors mentioned above, several technical factors can influence Bitcoin's price movements.
One of the most critical factors is trading volume. And this is a measure of how many Bitcoin are being bought and sold on crypto exchanges each day, and it can give us clues about whether traders are bullish or bearish on the cryptocurrency. Generally speaking, higher trading volume indicates more interest and activity, which is usually a good sign for prices.
Another crucial technical factor is Bitcoin's market capitalization or the total value of all Bitcoin in circulation. Investors and traders can use this number to gauge the overall size and health of the Bitcoin market, and it's one of the main ways that cryptocurrency investors compare different assets. Generally speaking, a higher market cap indicates a more established and liquid market, which investors and traders see as a positive sign for prices.
Finally, studying past price movements helps traders and investors identify patterns that could predict future price action. Many cryptocurrency traders use technical analysis to decide when to buy and sell Bitcoin. While its usefulness remains debatable, there's no denying that it can play a role in Bitcoin's price movements.
Bitcoin's fundamental and technical analysis is vital for traders and investors. That's because they can help us understand the underlying factors that drive price movements and identify patterns that could predict future price action. By taking both into account, you can better understand where Bitcoin's price will go.
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