In today's craze for digital currencies, Bitcoin has always been the focus of much attention. Its price has soared and plummeted from time to time, and this roller coaster-like performance has triggered widespread speculation and discussion. So, what exactly causes such drastic fluctuations in Bitcoin prices? Let's uncover the mystery behind Bitcoin together.

 Origin: The birth of Bitcoin and initial fluctuations

As the first digital currency to apply blockchain technology, Bitcoin can be traced back to 2009. Created by the mysterious person Satoshi Nakamoto, Bitcoin was originally just a concept of virtual currency with almost no actual value. However, with people's recognition of blockchain technology and the increasing demand for digital assets, Bitcoin began to gradually enter people's field of vision, and its price began to fluctuate. The main reason for the initial fluctuations is that the market's acceptance and cognition of this new concept are constantly changing, and the turbulence of investor confidence also directly affects the fluctuations in Bitcoin prices.

 Hot events: the influence of market sentiment and external factors

The surge and plunge of Bitcoin prices are often closely related to some hot events. For example, in recent years, the uncertainty of regulatory policies, hacker attacks, and the collapse of large exchanges have all had a huge impact on Bitcoin prices. At the end of 2017, the price of Bitcoin once soared to a historical high, mainly due to the relaxation of regulatory policies and the influx of institutional capital. However, the tightening of regulatory policies and the closure of exchanges in early 2018 caused the price of Bitcoin to fall rapidly. The constant interference of these external factors and the fluctuation of market sentiment make it difficult for the price of Bitcoin to stabilize, and it often rises and falls sharply.

 Technical factors: mining difficulty and market supply and demand relationship

In addition to the influence of external factors, the surge and plunge of Bitcoin prices are also closely related to its own technical characteristics. The difficulty of Bitcoin mining continues to increase over time, resulting in a gradual slowdown in the output of new Bitcoins. This supply-side scarcity has also become one of the important factors supporting the price of Bitcoin. At the same time, the market demand for Bitcoin is also increasing, especially in the context of financial crises and currency depreciation, people's demand for decentralized and scarce digital assets such as Bitcoin continues to rise. Changes in supply and demand will also directly affect the fluctuation of Bitcoin prices.

 Psychological factors: investor sentiment and market hype

Finally, the surge and plunge of Bitcoin prices are also affected by investor sentiment and market hype. Investors' panic and greed often amplify the amplitude of price fluctuations, forming a vicious cycle. Some market hype and rumors will also have a significant impact on the price of Bitcoin, making the price fluctuations more intense. When faced with drastic price fluctuations, investors often make impulsive operations and panic sell, further exacerbating the surge and plunge of Bitcoin prices.

 Conclusion: Rational investment and long-term planning

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

I believe that Bitcoin has become a digital currency that is familiar to the majority of investors. Investors who know about Bitcoin know that in the history of Bitcoin development, there have been many large-scale surges and plunges. Due to the development of the Internet and other communication systems, the current market entry methods, transaction methods and payment methods are undergoing a certain degree of change. Bitcoin is the product of the combination of monetary economic theory and modern network information technology. Since its birth, Bitcoin has set off a digital currency craze in the global financial field. So what is the reason for the surge and plunge of Bitcoin? Let the editor of the currency circle talk about it.

 What is the reason for the surge and plunge of Bitcoin?

As an emerging product, the emergence of Bitcoin is a revolution in the history of currency. While Bitcoin is soaring and plummeting, it has also caused people to think about digital currency. The first is the reason why governments of various countries forcibly ban or restrict Bitcoin.

Bitcoin is conducive to illegal transactions and hinders the government's management of state functions. Because Bitcoin has such characteristics, it is particularly convenient when conducting illegal transactions. At present, more than 50 well-known gambling websites accept Bitcoin to earn income. Illegal transactions driven by Bitcoin are not limited to gambling. The online black market Silk Road appeared in February 2011, where users could use Bitcoin to buy and sell illegal goods and services. Most of the illegal transactions on Silk Road involved drugs. For this reason, the government has stepped up its monitoring of Bitcoin, which has led to Bitcoin's surge and plunge.

Bitcoin also hinders the government from implementing its monetary policy and collecting seigniorage. Bitcoin breaks the government's monopoly on currency issuance, which will reduce the seigniorage that the government obtains through the purchase of interest-bearing assets with interest-free notes. At present, the impact of personal monetary assets being replaced by Bitcoin is negligible. However, the growth in demand for Bitcoin will weaken the government's ability to obtain revenue through seigniorage. Therefore, Bitcoin's impact on government budgets is a reasonable reason to restrict or ban the use of Bitcoin. And government restrictions are an important factor in Bitcoin's surge and plunge.

 Bitcoin's surge and plunge history at a glance

·June 2011

2011 was still a "pioneering" period for Bitcoin. At that time, few and only the bravest traders dared to get involved in Bitcoin transactions. This led to the drying up of Bitcoin liquidity at the time, and frequent surges and plunges.

In June 2011, Bitcoin once rose from around $0.95 to $32, and then plummeted to $2 in November, a full 94% drop, setting a record for the largest drop, which still stands today.

Today, the double-digit Bitcoin quotes seem not high, but at that time, Bitcoin trading volume was only a small part of today's. For most people at that time, Bitcoin was just an unknown experimental product, and no one could predict its future. So when it rose to $32, many traders thought it was the best time to take profits, so they left the market and led the Bitcoin plunge, and the traders who had not yet left the market were hit hard.

· November 2013

In November 2013, the largest and most typical collapse in Bitcoin history occurred, when Bitcoin plummeted 87%.

The trend of Bitcoin from November to January of the following year is exactly the same as the last four months, which seems to suggest that the Bitcoin bull market can easily fall into frenzy near the end of the year, and the influx of new investors and media coverage can help Bitcoin rise to incredible highs.

At the end of 2013, the price of Bitcoin was close to $1,200, which is a psychologically important threshold. After hitting this threshold, Bitcoin began a total of 411 days of correction, which also partly contributed to the collapse of the exchange Mt.Gox, and the evaporation of $500 million in funds. By January 2015, Bitcoin fell to a low of $150.

·November 2017

Five years after the price of Bitcoin rose to four digits, the price of Bitcoin rocketed to five digits and then continued to rise to $20,000. In retrospect, the two years before this were an excellent buying opportunity. If the price was only $750 in early 2017, it would have made a lot of money by the end of the year.

After the rocket was launched in November, Bitcoin fell sharply again, falling to $14,000 at the end of 2017, but the decline continued, once falling below the $6,000 mark on February 6. However, the price of Bitcoin seems to have rebounded since then. If we refer to the market situation in 2013, it can be expected that the trend of Bitcoin in 2018 will still be relatively optimistic.

The above content is the comprehensive answer of the editor of the currency circle to the question of what is the reason for the surge and plunge of Bitcoin. We know that the development of Bitcoin-like digital currencies is likely to be subject to government restrictions and cause surges and plunges. It is difficult for us to accurately predict where digital currencies will go in the future. We know that digital currencies are the integration of multiple fields such as mobile technology, Internet technology, finance, cryptography, etc., and digital currencies are likely to become a mainstream in the future. However, there are already many problems in the development of Bitcoin. If Bitcoin wants to develop into a mainstream currency, there is still a long way to go.

In summary, the surge and plunge of Bitcoin prices are the result of the combined effect of multiple factors, including the interference of external factors, and are closely related to internal factors such as market supply and demand, investor sentiment, etc. For investors, it is crucial to invest rationally and respond calmly to market fluctuations. While pursuing profits, we must also establish correct investment concepts and long-term planning to avoid being swayed by short-term fluctuations. As a new digital asset, Bitcoin's future development is still full of infinite possibilities. I believe that with the continuous maturity of blockchain technology and the gradual standardization of market supervision, Bitcoin prices will gradually stabilize. Let us wait and see and witness the future style of digital currency!