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How Bitcoin Investors And Brokers Are Shaping The Crypto Market

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One of the things you are likely to hear about Bitcoin trading and Bitcoin as an asset is that it’s all speculative. As a Bitcoin trader, this statement might sting you a bit, but that doesn’t mean it’s not true.

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Even though the technology behind Bitcoin and most other cryptos (Blockchain) is solid and it has been used extensively in conjunction with other technological solutions, it doesn’t give Bitcoin a “tangible” base. Bitcoin is an intangible asset, with no physical asset or real-world commodities backing it up.

It’s investors and brokers who are shaping and sustaining the crypto market.

 

How Bitcoin Investors Are Shaping The Crypto Market

There are two different realities we have to explore here. The first is how “crypto investors” are shaping the crypto market, and the second is how “Bitcoin” investors are shaping the broad crypto market.

But first, you need to understand the factors that determine the “price” of Bitcoin:

  • How much Bitcoin is currently available in the market (whether through mining or through the sales that Bitcoin investors made)?
  • The exchange you choose for trading plays an important role in determining the price. Though it might not vary by a significant scale, the exchange you are using to trade or convert your Bitcoin can influence the price you pay or get. And even these small margins can make a major difference in trades.
  • The cost-reward system of Bitcoin, i.e., how much an individual or a pool of crypto miners are rewarded for mining one Bitcoin. It keeps changing as more coins are mined.
  • Other cryptocurrencies: speculations and prices.
  • Regulations about crypto conversions and crypto exchange.

 

One common phrase used regarding the value of crypto is that “market sets the price,” which endorses its position as a commodity. There is no central regulation or setting the price of Bitcoin (which is the point of having a decentralized currency).

The “market” that sets the price of Bitcoin is mostly made up of investors since it’s not a physical commodity with real-life usage. But ironically, almost the same rules/trends govern the Bitcoin market as well.

You probably know that the price of oil (or, more accurately, the oil futures) fell into the negative territory for the first time in history during 2020. That’s because people were locked in, transportation was limited, planes weren’t flying, and the global demand for oil shrunk considerably as virtually the whole world went into lockdown mode.

But the oil companies kept producing oil at nearly the same rate, and since there was more supply than demand, the price went down. But now that the world is opening up and oil producers are controlling the supply, the price is going up.

The same thing happens with Bitcoin. The price of Bitcoin goes down when more people want to buy Bitcoin, but there is not enough Bitcoin to go around, so the people who have Bitcoins to sell can ask more for it, driving the price up. It can also go the other way around. When more people are dumping Bitcoin into the market, but there are not enough buyers, the price might plummet.

One difference with Bitcoin is that it has a limited supply. Only 21 million Bitcoins can ever be mined, out of which 18.5 million are already in circulation. Once they are all mined, the supply will stay static, and the price will only be controlled by the demand. Then Bitcoin will become akin to rare collectibles.

That’s how investors and Brokers shape the crypto market.

 

Conclusion

Since Bitcoin gets the most limelight among the crypto assets and more mainstream attention (even from institutional investors), it also has a lot of sway over the crypto market. When it’s going strong, people feel more comfortable dabbling with other crypto assets. But when it plummets, retail traders who are not in tightly knit crypto communities might start to dump other crypto assets back in the market as well, fearing crypto as the asset class is getting weaker. Thankfully, that’s not what’s happening right now. And if you want exposure to this exciting asset, you might consider trading through Bitcoin System.

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