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ToggleKey Takeaways:
- Bitcoin prices change every single second as it is influenced by supply and demand, investor and user sentiment, government regulations, etc.
- The price usually moves with a minimal margin when the markets trade sideways and triggers massive price action in case of major events knocking on the crypto space.
- The Bitcoin price is currently stuck around $30,000, failing to rise above $30,500 or drop below the support level.
Bitcoin Price Volatility
Volatility is a measure of how much the price of the token varies over time. it indicates whether the token is risky to hold Bitcoin is largely considered fairly volatile and is calculated by how much the price fluctuates relative to the average price over some time. The current volatility of Bitcoin is around 1.18%, while the 30-day average is around 1.81%, and the last 60-day estimate is around 1.66%.
Read On: Can BTC Price Reach $100,000 in 2024?
Below is the historical volatility of Bitcoin, which suggests the token has become less volatile comparatively.
Source: Buy Bitcoin Worldwide
Historical Analysis of Bitcoin Price Movements
- Bitcoin was introduced to the world by Satoshi Nakamoto through a whitepaper in October 2008 and the network went live in January 2009 with the original price at $0.
- In February 2011, the price of BTC soared above $1 for the first time, and within some months, it reached $10 and later at $30 on the Mt. Gox exchange.
- In 2012, during the first halving of the Bitcoin network, the miner rewards were halved from 50 to 25
- In 2013, the EFF started to accept BTC, due to which the token witnessed gains above 6000%. The price began at $13, reached $250, and corrected over 50%. Further after a brief consolidation, the prices peaked at $1100 in November & December.
- The price maintained a consolidated trend for a couple of years and in 2017 again breached the $1100 mark following the second halving in 2016
- By December 2017, the prices soared high to nearly $20,000 and later triggered a massive drop to form lows until March 2020
- The price triggered a massive upswing in the final quarter of 2020 which lifted the price toward new highs close to $69,000 during the last quarter of 2021
- The BTC price faced a massive rejection and traded under an extreme bearish trend until the end of 2022
- The price, since the beginning of 2023, has been trying to maintain a steady upswing and is expected to trigger a strong recovery phase until the end
Additional Read: Bitcoin Price Prediction
Bitcoin Supply & Demand
Bitcoin price varies mainly depending on the supply and the demand. If the supply rises with a drop in demand, the price tends to drop. At the same time, if the demand for the token rises and the supply drops, the value of BTC tends to rise. The supply has been rising since the BTC has been in circulation as new tokens are mined and added to the network daily. The current supply is around 19.42 million, while the maximum is restricted at 21 million.
Source: Ychart
Factors Influencing Bitcoin Price
- Bitcoin Market Adoption: Bitcoin’s value mainly depends on supply and demand. As more people embrace BTC for transactions, investments, or simply as a store of value, demand rises, as does the price.
- Bitcoin Mining and Halving: Bitcoin’s supply is capped at 21 million and is generated through mining. The halving event, which occurs every 4 years, reduces the number of new coins entering the market by 50%, impacting the price to a large extent.
- Bitcoin Market Sentiment: BTC prices tend to rise with positive news, like large companies’ adoption. Conversely, negative news like security breaches may drag the price lower. Besides, when the market is optimistic & greedy, people tend to buy more BTC, causing the price to rise, and panic selling may lead to a sharp decline.
- Institutional Interest in Bitcoin: Large institutions like banks, hedge funds, and other institutions may greatly impact BTC prices.
- Regulatory Concern: Positive regulations can encourage Bitcoin adoption, while strict regulations or outright bans can hinder its growth.
- Network Upgradations: New measures to improve scalability contribute to a more secure network and boosts confidence in Bitcoin.
- Geopolitical Events: Besides geopolitical events also impact the crypto space. For example, the recent Russia vs. Ukraine crisis deeply affected not only the crypto space but the traditional markets too.
- Competing Cryptos: The rise of the other cryptos in the market, also known as altcoins, may hinder the BTC progress rally as market participants’ attention may be diverted from the star crypto.
Read More: Bitcoin Halving in 2024
Conclusion
The Bitcoin price changes very frequently with changes in supply and demand. Although various other factors do impact the price, market sentiments play a major role in determining the value. The sentiments of the traders who help to keep up the volatility play a vital role in determining the price. Besides, the regulatory developments also have a larger impact on the BTC price as traders may either fall into FOMO or FUD, creating massive buying or selling pressure over the crypto. In short, Bitcoin is said to be extremely volatile, as the prices vary very frequently.
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