Recap
Click here for the previous article of The basics of bitcoin[1]
What drives the price of bitcoin?
[Upside] Supply and Demand
Eventually, if a sustainable increase of people uses this cryptocurrency in the long term, the supply goes up. Still, the demand will not go down due to the limit of 21 million coins. As a result, the value will pump up enormously and be inestimable.
In addition, the demand might go down, due to improper storage and physical damage, for instance, damage of hardware, password missing, losing the hardware, etc.
[Downside] Volatility
I have come up with three main factors that make bitcoin volatile.
Low Market Capitalisation, compare to the ratio of gold, silver, fiat money, holding bitcoin is still relatively low.
Key Opinion Leaders (KOL) action, some of the KOLs might call for his audience for investing in the cryptocurrency, which will attract followers, traders, and speculators.
The government and federal reserve do not wish to support. At some stage, some agencies might give out a statement on the point of view of cryptocurrency, trying to ban its use or even ban the use of the cryptocurrency trading platform from their people.
Why should I buy bitcoin?
Nowadays, the general public might believe the bitcoin (Cryptocurrency) is too dangerous to reserve your purchasing power or even to have for investment.
From my point of view, the public might felt its fluctuation and volatility. They lack understanding of the financial system structure and do not have education financial education that makes them feel unsafe. But actually the most uncertainly is the government and the federal reserve (central bank), lots of countries in our history had bankrupt, hyperinflation and even still happening nowadays.
I don’t believe in government and federal reserve (central banks). I better believe in my prediction.
I do recommend my audience also believe in their prediction instead of others’ opinion.
Click here for further details on Introduction to Federal Reserve.
Click here for further details on Federal Reserve’s general power and tools.
How do I think of the future of bitcoin?
In the long term, I believe the trend will keep rising due to a few factors.
United States Government Debt, high debt ratio to GDP is dangerous, and the fiat money nowadays is built on trust.
Click here for further details on debts.
Quantitative easing, the fiat paper money is keep printing.
Click here for further details on the tools to predict the value of bitcoin [Fundamental].
Click here for further details on the tools to predict the value of bitcoin [Technical].
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