When it comes to investing opportunity, there’s very few channels that are more valuable than bitcoin. When understood, even investors with less capital can enjoy huge, consistent gains by investing in a currency that’s grown to thousands of USD in value in just a few short years.
Understanding bitcoin rates, fluctuations, and trends is a fundamental part of understanding how bitcoin works, and making smart investments with the currency. The good news is that there’s no secret formula or hard to follow process for understanding this kind of stuff. In fact, by simply taking note of three overarching principles, you can better understand how rates tend to fluctuate in this market and when to take advantage of them.
Bitcoin is controlled by the people, and rates reflect that.
Unlike fiat, which fluctuates based on the government that issues it, bitcoin is an international currency. Everyone everywhere has equal access to BTC, and it trades at the same price (and for the same value) worldwide. The decentralization of the system means that it really is the only currency that was built entirely for the people, by the people. This also means that increased interest or acceptance of BTC globally can cause prices to shoot up– and decreased interest or a global loss of trust in the currency can cause prices to plummet. No one nation or entity controls bitcoin, but all have a part in its value. If you’re seeing a rise in bitcoin price, it’s a good indication that adoption rates or interest is rising on a global scale. This also means that these rises and falls can be tracked a little more accurately than stocks or one nation’s fiat supply. Wondering why the price has risen? Just turn on the global news!
There’s a limited number of bitcoin in the world.
When bitcoin was first created, it was created with the idea of there being a limit. That limit is 21 million. Each time more bitcoin is created and put into circulation, the currency gets closer to its limit. Bitcoin is created when blocks are added to the blockchain. Every few years, the number of bitcoin that are created by each block is halved. This will continue to happen until there are no more bitcoin left. This sort of system means that as the number of new bitcoin starts to dwindle, the value of existing bitcoin will likely start to rise. Buying sooner rather than later can be the best way to ensure significant returns down the line.
There’s no surefire way to predict bitcoin’s value in the long term
The value of bitcoin 10, 15, or 20 years from now depends on a number of factors that just can’t be predicted with much accuracy today. Although we know BTC is here to stay, what it could become with an increase in adoption or a global move to decentralized banking is yet to be seen. China, the US, and other large nations have already created task forces, committees, and assemblies to understand and promote the currency, so there’s no denying it will become much more a part of everyday life than it even is now. But whether that will be as a full replacement for traditional fiat, a highly valuable commodity that trades like gold, or something in between depends on the volatility of current markets, the global economy, political elections, and more.
Bitcoin’s perceived long term value has very little impact on its day to day rate. Just like we don’t know what the US dollar will be worth in a decade, but still use it for just about everything, the same goes for BTC. Understanding its rate today can show you just how valuable and important it will be in the future, and that’s more than enough for most investors to see what a great value the currency is.
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