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What Determines the Price of 1 Bitcoin?

Unlike investing in traditional currencies, bitcoin is not issued by a central bank or backed by a government. And buying a bitcoin is different than purchasing a stock or bond because bitcoin is not a corporation. Consequently, there are no corporate balance sheets or Form 10-Ks to review.



Understanding What Determines Bitcoin's Price

Unlike investing in traditional currencies, bitcoin is not issued by a central bank or backed by a government; therefore, the monetary policy, inflation rates, and economic growth measurements that typically influence the value of currency do not apply to bitcoin. Contrarily, bitcoin prices are influenced by the following factors:

  • The supply of bitcoin and the market's demand for it

  • The cost of producing a bitcoin through the mining process

  • The rewards issued to bitcoin miners for verifying transactions to the blockchain

  • The number of competing cryptocurrencies

  • The exchanges it trades on

  • Regulations governing its sale