What Affects the Price of Cryptocurrency?

Most fiat currencies have a long and well-established tradition, but that’s not the case with Bitcoin. Even though it’s the first and original cryptocurrency, Bitcoin only came into existence in 2009.

When we observe its trajectory, it’s hard to ignore how quickly its value has grown. Currently, Bitcoin stands close to £42,000, and that’s not even its highest price.

But what affects the price of any cryptocurrency, and how can anyone afford it? We’ll provide all the answers here, and touch on how to buy Bitcoin and safely store it in your trustworthy Bitamp Bitcoin wallet.

The Supply and Demand

Unsurprisingly, the number of Bitcoins in circulation impacts its price. Close to 19 million coins have already been mined, but plenty are held as savings, thus are not available.

Indeed, new coins are continuously minted, but the rate at which they are introduced is fixed. Furthermore, the production slows down every few years since there can only be 21 million Bitcoins in existence.

The mainstream acceptance of Bitcoin also affects supply and demand. When social media and corporate news giants talk about Bitcoin, both the demand and price increases.

When major financial institutions and corporations start purchasing Bitcoin, the supply is reduced, hence the price goes up again.

Legal Considerations

One of the most appealing aspects of cryptocurrency is its decentralised nature. Not a single entity is in charge of the Bitcoin blockchain, but that doesn’t mean some regulations don’t apply.

In the UK, it’s legal to own and trade Bitcoin, but no cryptocurrency is legal tender. However, Bitcoin investors and traders must pay taxes on their profits, whether income tax or capital gains tax.

Furthermore, the existence of exchange-traded funds and other financial products can also increase the demand for Bitcoin.

Finally, the price of Bitcoin can be affected when regulation becomes too stringent. If all parties involved have to abide by too many rules, the demand inevitably decreases.


Even though Bitcoin is essentially synonymous with cryptocurrency, it’s not the only digital coin on the market.

It’s impossible to guess the correct number, but it’s estimated that there are close to 10,000 cryptocurrencies active today. While that sounds quite impressive, in reality, only a few are actual competitors to Bitcoin, which is still the largest digital currency.

Savvy crypto investors looking to expand their portfolios may buy Ethereum, Binance, Litecoin, or Polkadot instead. When Bitcoin’s top competitors do well, the price of Bitcoin is more likely to stay down.

Cost of Production

If Bitcoin is virtual money, how can it cost anything to produce? The process of Bitcoin mining consumes a lot of electric energy.

The mining pools, which represent large groups of Bitcoin miners, operate around the world. The machines used in the process solve complex mathematical equations, and miners receive rewards for their efforts.

The cost of equipment, electricity, and time can be pretty costly and is becoming more expensive every year. As more users join the mining pool, the mathematical puzzles become more complex. All of these considerations are sure to impact the price of Bitcoin.

Who Can Afford Bitcoin?

If a single Bitcoin costs tens of thousands of pounds, does it mean only a handful of people can afford it? Fortunately, that’s not the case at all. A single Bitcoin (BTC) can be divided into eight decimal places.

This smallest unit is called Satoshi (sat), but there is also millibitcoin representing a one thousandth of a Bitcoin. When buying coins for the first time, you can often spend no more than a couple of pounds to get started.

Once you buy Bitcoin, it’s preferable to move it to safe storage. You could create a trustworthy Bitcoin wallet app or a hardware wallet if you prefer.

People who invested in Bitcoin in the early days of cryptocurrency didn’t need to spend much to see a profit, but it’s still possible to make money with Bitcoin.

Dealing With Volatility of Bitcoin

Even fiat currencies are affected by major international events and political instabilities. It’s no wonder, therefore, that a particularly unfavourable news cycle, increased regulations, and lack of interest could devalue Bitcoin.

On the other hand, when corporations and banks buy Bitcoin, everyone else does likewise. All of these movements make Bitcoin’s price volatile and affect supply and demand.

Furthermore, even though it seems huge and invincible, Bitcoin does have competition, impacting how its price moves.

Finally, remember that anyone can have a piece of Bitcoin and start building their investment from there.