You’ve probably heard the word “Bitcoin” floating around the news or online, but you might not know exactly what it is. Bitcoin is a digital currency that allows people to buy things and send money to one another without having to worry about going through a bank or government. But what exactly is it? How does it work? And why does Bitcoin price change so much?
Bitcoin is a cryptocurrency—a digital form of money that’s created and stored on a decentralized network of computers. Since it was introduced in 2009, Bitcoin has become increasingly popular as a way to buy and sell goods, send money to friends and family, or invest in other cryptocurrencies. But with so many people buying and selling Bitcoin, why does its price change so much?
There are two main factors that influence the supply and demand for Bitcoin: new supply and demand from outside investors. In general, when there’s more demand for Bitcoins than there is supply available for purchase, prices go up. When supply exceeds demand for Bitcoins, prices go down. This phenomenon is called “buyers’ market,” which means there are more buyers than sellers—and vice versa for a “sellers’ market.”
Reasons Why The Price of Bitcoin Changes Often
The Bitcoin price changes often and it can be hard to keep up with. If you’re wondering why the price of Bitcoin is rising or falling, here are a few reasons that might explain it:
• Bitcoin has been gaining popularity in recent years and more people are using it. This means more people are trying to buy and sell Bitcoins, which increases demand for the currency and drives up its price.
• Bitcoin’s supply is limited. There will only ever be 21 million Bitcoins mined, so as demand rises and falls, so does supply. This means that when there’s a huge increase in demand for Bitcoins, their value goes up because there are fewer available compared to how many people want them.
• Bitcoin itself is unstable because of its high volatility—it’s not a stable investment like gold or the dollar because its price goes up and down all the time based on market conditions like supply/demand fluctuations or news related events like government crackdowns on cryptocurrency trading platforms.
Bitcoin can be used for many different things, including buying goods and services. But most people use it as an investment because they believe that its value will continue to increase over time.
