Bitcoin (BTC) like most cryptocurrencies has seen its price vary since its creation. Between falling markets and recovering, investors are on high alert all the time as crypto assets seem to be on a rollercoaster ride. But then what is at the origin of these upheavals? Discover these four reasons responsible for 88% of the variation in the price of BTC.

bitcoin cryptocurrency

Volatility of bitcoin and tech stocks

The price of bitcoin is influenced by several factors. As an unstable asset, many events can affect its price. Since the creation of cryptocurrencies, most investors have turned to this sector. Promising and potential source of many gains, the negotiators quickly adopted them, making them famous at the same time. However, some have disregarded its instability.

Like all crypto assets , bitcoin is known for its volatility. Therefore, a high price today may fall tomorrow. This is one of the main factors behind the variation in the price of BTC. Investors most often want to make gains but forget that any investment involves risk. Currently, the price of bitcoin is down nearly 70% from its all-time high in November 2021. And this isn’t the first time the market has been bearish. However, thanks to the volatility, it usually turns back to green.

Bitcoin is also benefiting from the historic volatility of tech stocks. Unlike stocks, bitcoin (BTC) trades cheaper. Indeed, the proxy wallet corresponding to one bitcoin is equivalent to approximately $82,000 of the Nasdaq 100 index, $50,000 of borrowed gold and $21,000 of borrowed silver. Hence, if estimated on this basis, the proxy wallet stands at $25,000 compared to bitcoin which is currently trading at $19,259.

General market volatility and the price of gold

Apart from the volatility of tech stocks and bitcoin itself, there are many other factors that have a major impact on the price of bitcoin. Among other things, the correlation of bitcoin to the price of gold. Many people think this correlation should be positive since bitcoin and gold are often used to store value unaffected by inflation. However, bitcoin (BTC) and gold are two opposing solutions to a lack of trust in the currency. Thus, when other factors are taken into account, the correlation between these two assets becomes strongly negative.

Just like options, the price of bitcoin increases when the market is volatile. Thus, the volatility of the overall market can be an advantage for the first crypto. Currently, the Nasdaq index add-on has a value of $8,000. If the volatility of the index increases by around 50%, the price of bitcoin could increase by almost $4,000.

However, if the opposite happens and the volatility of the index drops by 50%, the price of bitcoin could also lose value according to Aaron Brown. Because of this, market movements affect the price of bitcoin in different ways. We have already seen them at work during the bear market of 2018 / 2019. But also, during the last six months. Just as they allow prices to rise, they can also create a downtrend.

Many factors have influenced the price of bitcoin since its inception. Over the past four years, four major factors are responsible for 88% of the price variation of the leading cryptocurrency.

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