Topic: Is there any technical reason why the price of bitcoin might rise or fall ? (Read 631 times)

No matter what, it all comes down to demand. The price is heavily manipulated, but ultimately we need demand, if the demand is big enough, the marketcap raises and the whales have a more difficult time trying to manipulate he price.
With a marketcap thats smaller than Uber, the big early whales are swimming in a pool.

Mostly no reason beside fear and greed. People act on news like currency problems in a certain country or on bad things like exchanges hacked. But mostly it simply moves how it wants. Relatively unpredictable.

Probably sooner than that.

Bitcoins are already being lost all the time.  The rate at which new bitcoins are being created is cut in half every 4 years.  Eventually there will be more bitcoins lost per year than are created, and at that time the net supply will become deflationary.


The price is based on currently available supply and current demand. If it weren't reasonable to enough buyers or sellers, then it would change.


First of all, each coin is not "divisible by 1 million".  Each coin is divisible by 100 million.

Those 100 million "pieces" that each bitcoin is divisible into do NOT have "a value that is as high as near to $300".  Each of those 100 million pieces only have a value of about $0.000003


It will only do so if there is increased demand, decreased supply, or both.  Increased demand can come for new uses and from increased popularity of current uses. Decreased supply can come from hoarding or destruction of existing supply.

This isn't just true of bitcoin, it's true of any and all commodities.  A barrel of crude oil will be worth more in 1 year if there is increased demand, decreased supply, or both.  Increased demand can come for new uses and from increased popularity of current uses. Decreased supply can come from hoarding or destruction of existing supply.


There is a fixed amount of gold on the planet.  Ignoring the possibility of mining asteroids and other planets for the moment, that supply is limited.  When it is first discovered the supply greatly exceeds the demand, gold isn't very valuable.  Let's say people are willing to exchange a single 100 unit (pounds? kilograms? doesn't matter, choose the unit that is natural to you) bar of gold for a loaf of bread.

Eventually the demand for gold increases (and perhaps it becomes more difficult to find new gold mines).  The supply isn't growing as quickly anymore and the demand is growing faster, as such the value increases. People start dividing their gold into smaller pieces.  Instead of exchanging a single 100 unit bar of gold, they divide it into 100 separate units.  They still have 100 units, but they've "divided" it.  Now they can buy a loaf of bread with a single 1 unit bar.  Is the supply of gold really limited if each 100 unit bar can be separated into 100 individual units?  Well, the owner of the 100 unit bar has gone from being able to purchase only 1 loaf of bread to being able to purchase 100 loafs of bread without changing the amount of gold he owns.

Eventually the demand for gold skyrockets (and perhaps there is no longer any gold that can be afford-ably mined).  The supply is slowly shrinking as bits of gold are permanently lost or destroyed. Therefore the value takes off.  People start dividing their gold into smaller pieces.  Instead of exchanging a single 1 unit bar of gold, they melt it down and make 100 coins out of each unit. They still have 100 units of gold, but they've now "divided" it into 10,000 coins each.  Now they can buy a loaf of bread with a single coin.  Is the supply of gold really limited if each 100 unit bar can be separated into 10,000 individual coins?  Well, the owner of the 100 unit bar has gone from being able to purchase only 1 loaf of bread to being able to purchase 10,000 loafs of bread without changing the amount of gold he owns.

Replace the "bar of gold" concept with "wallet of bitcoin" and perhaps it will all make sense?

The most 'technical' reason of bitcoin price rise what comes to my mind is the 'halving' of mining rewards. People are generally share an option that after halving next year bitcoin price will go dramatically up.
Other that that I feel bitcoin price is based on manipulation of price by whales, panic caused by bad news and of course normal fluctuation of price.

Deflation increases the amount of things you can buy. Fiat currencies are inflationary, meaning over time you can buy less. A good example is the oft quoted 'Today's US dollar is worth 98% less than what it was in 1913.'

In other words, it can't buy as much as what it used to be able to buy. This is due to inflation... as well as government foolery.

As to the value of Bitcoin, monetary value comes from consensus. Dollars have no intrinsic value whatsover. They are not backed by gold anymore. People use national currencies because they trust their governments.

Bitcoin's value comes from consensus, and also because it's a transaction system, and an asset.

If I divide a bar of gold into a thousand pieces each piece still has a market place value depending on how much anyone in the marketplace wants it. Same with Bitcoin. Gold is just shiny metal, nothing special really. But gold is always mined at a consistent rate, more or less.

Value is only ever what groups of people all agree is valuable. It's entirely subjective, but, usually based on some form of scarcity.


Take a look at your sentence changed:

If I take speculation completely out of the picture and buy gold for $1000 today then why would (or will it) be worth more in 1 year (again from a technical only point of view).

The answer is, no reason whatsoever.

Dollars... no reason whatsoever

Platinum... no reason whatsoever

My mothers bad cooking... in this case, the value will go down, I'm sure of it.

If you think about it too much, none of it makes any sense, except for in view of consensus of value.

What do you mean by technical reason? Everything is based on speculation, but speculation is based on factors such as the maximum potential of bitcoin, how big can it get? How many people currently use it? Has the number of users been growing or declining? Has the rate of growth been steady or declining? How has development been the past while? Is bitcoin becoming easier to use? Are people becoming more aware and accepting? etc.


Without those real factors, there would be no speculation going on.

When you say deflation are you meaning that after those 21 million have been issued then slowly bitcoins will be lost and so what is left will have more value?  But does that really make the current price reasonable.  I can't understand how something that will have 21 million coins with each divisible by 1 million can have a value that is as high as near to $300.

If I take speculation completely out of the picture and buy a bitcoin for $300 today then why would (or will it) be worth more in 1 year (again from a technical only point of view).

You only really need to study two words: Inflation/deflation

Bitcoin is deflationary.

Inflation = Happy Banks & Governments Vs. Unhappy people

Deflation = Happy people Vs. Unhappy banks & Governments

On a long enough time scale, anyway.

Supply and demand, this two are the technical reason. Given limited and almost costant supply, if demand grows more than the actual level, the price will rise.

You can still satisfy all the possible demand by dividing every single coin in satoshis, but a whole coin price will increase.

I understand there's a lot of speculation out there but taking that out of the equation then are there technical reasons why price should rise or fall?  What I keep hearing is there's a limited supply of bitcoins. But is the supply really limited if we can have 21 million and then each of those can be divided up a million times.