Analysis of the deep reasons that control the rise and fall of Bitcoin

Bitcoin, a digital currency that has subverted the traditional financial system, has attracted the attention of global investors since its launch in 2009 with its unique decentralized characteristics and huge market volatility. However, it is this volatility that has confused many people about the rise and fall of its price. What factors control the rise and fall of Bitcoin? In this article, we will deeply analyze the various factors that affect the price of Bitcoin from multiple perspectives and reveal the complex mechanism behind it.

First of all, the market supply and demand relationship is the most basic factor affecting the price of Bitcoin. The total supply of Bitcoin is limited to 21 million, which makes Bitcoin scarce. When investors' demand for Bitcoin increases, the price will naturally rise. For example, in March 2020, due to the impact of the COVID-19 epidemic, the global economy was severely hit, and many investors began to regard Bitcoin as a safe-haven asset, causing its demand to surge and its price to rise rapidly. On the contrary, when market sentiment turns pessimistic, demand decreases and prices will fall accordingly. Therefore, changes in supply and demand play a vital role in Bitcoin price fluctuations.

Secondly, market sentiment and investor psychology are also important factors affecting Bitcoin prices. In the financial market, investor sentiment often triggers group behavior, which in turn affects price trends. For example, when Bitcoin prices rise, many investors will have a "follow the trend" mentality and enter the market to buy, further pushing up prices. Conversely, when prices fall, panic selling will exacerbate the decline in prices. During the surge in Bitcoin prices in 2017, a large number of FOMO (fear of missing out) phenomena appeared in the market, and many novice investors flocked to the market, causing prices to continue to rise.

In addition to supply and demand and market sentiment, changes in policies and regulations have also had a significant impact on Bitcoin prices. Governments have different attitudes towards Bitcoin. Some countries are open to it and actively promote the development of blockchain technology, while others take restrictive or prohibitive measures. For example, China cracked down on ICOs (initial coin offerings) and exchanges in 2017, causing Bitcoin prices to fall sharply. In some other countries, such as the United States, regulatory policies are relatively loose, which has promoted the growth of Bitcoin. Therefore, the impact of changes in policies and regulations on the Bitcoin market cannot be underestimated.

Technical factors also play an important role in Bitcoin's price fluctuations. Bitcoin network technology upgrades, transaction speeds, and fees may affect the user experience, thereby affecting demand. For example, in 2017, the Bitcoin network was congested, transaction confirmation time was extended, and fees soared, causing many users to turn to other faster and less-fee digital currencies, thus affecting Bitcoin's market share and price. In addition, changes in Bitcoin's mining difficulty and reward mechanism will also have an impact on prices. The halving event every four years will reduce the supply of Bitcoin, which usually leads to price increases after the halving.

In addition, the influence of media reports and social networks are also factors that cannot be ignored. Media reports on Bitcoin often affect public perception and sentiment. For example, when mainstream media reports positively on Bitcoin, it often attracts more investor attention and investment, driving up prices. Negative reports, on the other hand, may cause panic, leading to investors selling and price drops. The comments of opinion leaders and influencers on social networks can also cause sharp market fluctuations in a short period of time. For example, Tesla CEO Elon Musk's Twitter comments have repeatedly caused sharp fluctuations in Bitcoin prices, which fully demonstrates the importance of social media in the Bitcoin market.

Finally, changes in the global economic situation will also affect the price of Bitcoin. Economic crises, inflation, interest rate changes, etc. may cause investors to re-evaluate their asset allocation, which in turn affects the demand for Bitcoin. For example, when global economic uncertainty increases, many investors will regard Bitcoin as a tool to hedge risks, thereby driving up its price. In the process of economic recovery, investors may turn to traditional assets, resulting in a decline in Bitcoin demand and a decline in prices.

In summary, the rise and fall of Bitcoin prices is the result of the combined effect of multiple factors. From market supply and demand, investor psychology, policies and regulations, technical factors, market competition, media influence to changes in the global economic situation, all are important factors affecting Bitcoin prices. Understanding these factors not only helps investors make more informed decisions in a complex market environment, but also provides an important reference for us to explore the future development of digital currencies in depth.

In this rapidly changing digital currency market, investors need to keep a clear head and rationally analyze various influencing factors in order to find their own investment opportunities in the volatile market. The future of Bitcoin is still full of uncertainty, but it is certain that it will continue to lead us into a more digital financial era. In the face of this change, we must not only pay attention to Bitcoin itself, but also pay attention to the technology, policies and market dynamics behind it in order to seize this historic opportunity.

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.

Bitcoin is the world's first digital currency. It was launched in 2009 and paved the way for the evolution of encryption. The identity of its creator, Satoshi Nakamoto, is still shrouded in secrecy. As the most popular cryptocurrency, Bitcoin can be used to purchase products and services in many countries and online, just like traditional currencies. It is important to know that cryptocurrencies are highly volatile because they are supported by peer-to-peer technology and are not controlled by any central agency, government or organization. Almost anything can change their prices. Many investors want to know what causes the rise and fall of Bitcoin? Let the editor of the currency circle introduce it to you.
 What factors control the rise and fall of Bitcoin?
A series of unfortunate events can cause the price of Bitcoin to crash dramatically. But, equally, a series of lucky events can send it soaring. Let’s explore some of the events that fueled the rise and fall of Bitcoin.
·supply and demand
Cryptocurrencies are subject to cycles of high public attention, and when demand for cryptocurrencies is high, their prices can rise dramatically. Bitcoin’s supply is limited, which marks its deflationary characteristics and provides another reason for its growth.
Fiat crisis
When traditional currencies face a crisis, cryptocurrencies stand out due to their decentralization - especially Bitcoin. When investors lose interest in fiat currencies, they turn to Bitcoin or its competitors, driving up prices.
Regulation or market manipulation
Government bans, or even regulation or tax discussions on cryptocurrencies can reduce their value. Restrictions make potential buyers very reluctant to buy, so demand falls.
·Crash of trust caused by bad publicity
Cryptocurrency prices are sensitive to both good and bad news, largely because they are unregulated. The media plays a big role in people’s perception of cryptocurrencies — anything that goes viral about a real-world application drives Bitcoin’s price.
Security vulnerabilities
The digital and unregulated nature of cryptocurrencies makes them vulnerable to hacker attacks. Every time a hack occurs, it undermines the reliability of cryptocurrencies. For example, in 2014, when hackers attacked Mt.Gox (a Japanese BTC exchange) and stole a large number of coins, the value of Bitcoin immediately dropped sharply.
 The development history of Bitcoin
2008 – The white paper titled Bitcoin – a peer-to-peer electronic cash system is released under the name of Satoshi Nakamoto, describing how Bitcoin works.
2009 – The Bitcoin software is first made available to the public. Mining – the process of creating new Bitcoins and putting them into circulation – also begins.
2010 — Bitcoin first gained importance: 10,000 Bitcoins for two pizzas (pizza lovers alert: you can celebrate Bitcoin Pizza Day on May 22!). This purchase is the first known offline and real-world Bitcoin transaction. As it gained popularity, its first correction occurred. It lasted for more than 23 days.
2011 – Altcoins emerge as a natural consequence of Bitcoin’s popularity. Today, there are over 4,000 cryptocurrencies in circulation, with new ones appearing regularly with dedicated communities of supporters and investors.
April 2011 - Time and Forbes discuss Bitcoin for the first time, and its popularity grows. A little later in June, the price of Bitcoin jumps 3,200% from $1 in April to a peak of $32.
2013 – While the U.S. Senate recognized Bitcoin’s potential in late 2013, China began to impose restrictions on its use. Soon after first reaching $1,000 per Bitcoin, the price quickly began to fall, eventually plummeting 87%.
2014 - The world's largest Mt.Gox went offline, and 850,000 bitcoins disappeared. This was one of the largest hacker attacks in the history of Bitcoin.
2016 – After the 2015 Bitcoin correction, the crypto industry showed signs of recovery.
2017 - Bitcoin grew 1950% from $974 to $20,000. Its growth is attributed to its continued growth in popularity and the emergence of more and more uses. Banks began to study the ways they might use Bitcoin.
2018 — OMG! A terrible year for Bitcoin. From its all-time high (ATH), Bitcoin lost 83% of its value. For the next two years, its price went sideways.
2020 - The world economy shut down due to the pandemic, and Bitcoin regained its life - full recall. The price of Bitcoin reached just under $24,000 in December 2020 (a record price), up 224% from $7,200 at the beginning of 2020.
2021 – Bitcoin had its best day yet in April, breaking all previous price records and reaching over $64,000.
The above content is the specific explanation of the question of what causes the rise and fall of Bitcoin by the editor of the currency circle. Some supporters believe that Bitcoin may eventually replace legal (government-issued) currency due to the growing popularity of digital payments. Others also say that it is not manipulated by governments and central banks and provides a more democratic payment system. At the same time, investors believe that it can hedge against inflation. Skeptics claim that Bitcoin has no intrinsic value and say it poses risks to investors who will not be protected by regulators or financial protection programs if the asset plummets. Investors may face fraud because cryptocurrencies such as Bitcoin are associated with money laundering and black market transactions.

At the same time, market competition is also an important factor affecting the price of Bitcoin. With the development of blockchain technology, more and more digital currencies have come out, and market competition is becoming increasingly fierce. The rise of emerging digital currencies such as Ethereum and Ripple has attracted the attention of a large number of investors and distracted attention from Bitcoin. This competitive relationship not only affects the market share of Bitcoin, but also exerts direct pressure on its price.