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Why does Bitcoin fluctuate (why does Bitcoin price fluctuate)

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Why does Bitcoin fluctuate (why does Bitcoin price fluctuate)

Why does Bitcoin fluctuate? Why does Bitcoin fluctuate We can explain it from several aspects

1. What is the Market manipulation mechanism

In traditional financial transactions, the value of assets is determined by its own price and demand: when buying, the price will rise; If not purchased, it will fall; Once sold, the price will decrease. This behavior leads to a significant drop or decline in prices

2. The correlation between the price of Bitcoin and the stock market is high

For investors, a relatively simple question is: “Do you think the current investment product is trustworthy?” According to the model of “Cryptocurrency industry” proposed by researchers, the word “Digital Gold” is a popular term used to describe Bitcoin. It is called Bitcoin because it exists as a commodity on the Internet and has a wide range of uses. Therefore, people usually define it as a hedging tool (such as speculation) rather than a payment method (such as credit cards) 3. How strong is Bitcoin’s liquidity? Bitcoin is currently mainly held by institutions, but this does not mean that no other company has provided Bitcoin’s custody services. Instead, as more and more customers join this field, they hope to invest their funds into various strategies in this field by purchasing these funds. Although some people have started to view Bitcoin as a secure investment target, most people are unaware of this or have never heard of what it is

4. The reason why Bitcoin has an exceptionally sharp price trend

In general, investors tend to purchase a large number of digital currencies at a higher speed and lock in these currencies for a long time, thereby keeping their money in it.

. For example, if someone wants to conduct spot trading on an exchange, they need to spend thousands of dollars to obtain a contract. Such a situation may cause some investors to suffer huge losses – especially considering the U.S. government’s intervention measures in the country’s economy, especially before December 2020, due to the impact of the COVID-19 epidemic, many retail investors may not sell all BTCs to gain profits as before, and may even become potential big whales

5. How Bitcoin Affects Supply and Demand Relations

In order to analyze the underlying reasons for Bitcoin’s volatility and price trends, analysts say that the main factor behind Bitcoin is volatility.

Firstly, the volatility of Bitcoin does not mean that they are only temporary. On the contrary, Bitcoin will continue to change over time. On the other hand, due to the uncertainty of prices and the lack of market stability, fluctuations are also prone to occur, and the volatility is often greater than expected. In other words, when Bitcoin rises or falls, more people will enter the market, indicating that there are many people participating in the market 6. Why did the market selling of Bitcoin caused by the “price surge” cause such significant fluctuations

Why does Bitcoin fluctuate in price

According to Bitcoin Exchange Guide, the price of Bitcoin has been fluctuating since September last year. In the past week, due to price decline and Selling climax for various reasons, the price of BTC has dropped from about $55000 to about $33000. However, the Bitcoin market has not been affected as its trading volume remains high Why has Bitcoin risen to such a high price? Let’s first take a look at the reasons for the fluctuations in Bitcoin prices. The main driving force behind the rise in Bitcoin prices is the increasing demand for institutional investment. These investors believe that as more and more institutions participate and more people enter the field of Cryptocurrency, Bitcoin may reach a higher price. And this is precisely why Bitcoin has such price fluctuations: when an asset’s price drops significantly, it will start to decline or rebound; Once the price plummets, it will either fall again or return above $10000 until all relevant factors have dissipated, thus maintaining its value stable.

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