Topic: where does the price of bitcoin come from? (Read 499 times)

We all decide it basically, that's the short story. When we are talking about "the market" that is us, the buyers and the sellers. As long as we say it should go up, we all buy more bitcoin because we believe that it should be going up, and since we buy it, it does go up, and when we say it should go down then we sell it and it does go down because we sold it. That's how the decision is made.

Certainly there will be some who say it should go up when majority say it should go down or vice versa, but the point here is that majority should say something and agree to it all together, if that happens then the market will decide on the price of bitcoin.

be careful with the statements of other investors or whales, because maybe it's just manipulation, FOMO made to raise the market price and then slam it. The most correct and preferable is to look at the market with technical analysis, it will describe how the market is and what is likely to happen next.

Following someone's TA is not wrong, but we as followers must know and understand what they share. At least we also have to know the basic science of TA so that we can choose whether TA is accurate or not. and lastly, as you said, choosing someone who really has fuel and is professional in the field of trading, it is very necessary. Never follow someone who is only good at manipulating, good at making FOMO news but doesn't have good TA and FA knowledge.

The global price tickers for bitcoin are imperfect because they depend on the data sent by exchanges and only by a handful of the biggest exchanges. Also, big exchanges react automatically through bots. You cannot expect an exchange in Japan to react to a big selloff in Europe that happens in 3 am of Japanese time, yet exchanges react pretty fast when you look at the tickers.
The imperfection of this system could be seen in 2014 when Chinese exchanges were faking volume and falsifying data they were sending out. It can be seen during flash crashes when there's not enough liquidity.


The invisible hand is a metaphor for how, in a free market economy, self-interested individuals operate through a system of mutual interdependence.
https://www.investopedia.com/terms/i/invisiblehand.asp

Because it is decentralized and as long as it is not manipulated, the price of Bitcoin come from the demand of the people who are buying Bitcoin and willing to part with their hard earned fiat currency.  News, upgrades and updates also help to boost the trust of people thus creating more demand on BTC.

Market forces determine the price of Bitcoin. The market forces are the BUY and SELL that takes places in various exchanges and trading platforms. Bitcoin is decentralized - not controlled by anybody. Bitcoin is very volatile, that is, the value goes up and down very rapidly. In a day, the price can change up to 3 or more times. Buy or Sell transactions affect the price of Bitcoin. It is highly sensitive to market forces. It is not like fiat currencies that government of some countries manipulate leading to inflation.

The value of every currency ^{(fiat or BTC)}lies in its level of supply and increasing demand. This is what Satoshi understand when he introduced block halving in other to control the inflation in the price of the Bitcoin market, the government ought to have learned through the Bitcoin concept but they still choose to follow their printing of my cash.

Anyone can predict the price of the Bitcoin market though the result may not be correct.

I agree with this.

It's no one but at the same time everyone I guess? No single person could possibly predict the price but at the same time, the price adjusts to whatever the general sentiment of the market (which is based on the demand of owners/users). It's decentralized meaning no one can actually affect what it is, the transactions, the wallets (decentralized ones, not centralized). Basically, it just takes the processes away from a centralized group. If you were going to start predicting, then leave it to predicting only and do it yourself. Don't trust any so called predictions.

People can make all sorts of assumptions and predictions, but there are only a handful of ways to affect the price, and they are not in our hands. One is being an extremely rich and influential person like Elon Musk, and make a big announcement and possibly pour a billion or two into or out of Bitcoin. Then there are governmental decisions of countries that have a lot of crypto traders or miners. If there's a bill to ban some crypto activities in a country like that or if a country like that surprisingly decides to adopt a very favorable crypto policy, that can affect the price as well. Also, if you're WHO or something like this, very influential, and you make an announcement that can have a major effect on the economy, that will affect the price as well. But in all these cases we're talking about a short-term effect, and I'd say a normally no more than 20% price change. Whether this trend persists or the price quickly gets back to its previous range basically depends on the community of traders and investors and their behavior. We're all a small part of that community, too small to cause serious change on our own or even if many people unite.

Like other commodities or assets the price of Bitcoin is determined by the force of demand and supply. The higher the quantity demanded the higher the price, while the lesser the quantity demanded the lesser the price. When people sell their Bitcoin because of certain prediction or uncertainties the quantity of Bitcoin in the market would increase which would make the price to drop. While when people save or keep their Bitcoin asset and are not willing to sell, the price would go up because it is now scarce in the market. Don't also forget that the price of Bitcoin like any other investment commodities can be manipulated. But the impact of manipulations on Bitcoin is minimal because it is decentralized.

I think the price of bitcoin comes from the hands of bitcoin holders in large quantities if bitcoin holders in large quantities sell all of their assets then the bitcoin price will also drop drastically even if bitcoin holders sell all bitcoins then bitcoin will have no value anymore. so I conclude that the price of bitcoin is because investor confidence is still very close to bitcoin.

Yeah listening to someone price prediction is really annoying so the personal knowledge on TA is a must to verify all predictions you can see on social media post if valid or not. Actually there's nothing to follow someone TA especially if the analyst has an impressive portfolio and high accuracy prediction in the past because they are spending time to analyze chart compared to us that casually checking chart with just common knowledge only in TA. I think we just need to become diligent on choosing who to follow if we have no talent on this particular area.

will feel dizzy if we listen to predictions from various sources. it is most reassuring if we can analyze ourselves technically and fundamentally, so that we have decisions based on personal thoughts. and I think when we talk about bitcoin, it's just a matter of time, because the most important holder in crypto is bitcoin. and when investors have stated that they bought in large quantities and were followed by many other investors, then that's where the price will go up, and our job is to find areas to get out of the market.

It is determined by "Supply" and "Demand" on public Bitcoin Exchanges and other platforms where bitcoins are traded. Then you get websites that will consolidate the prices from different Exchanges ...and they will combine that data to reflect the Bitcoin price at any given time.

An example of that is ==> preev.com ....where they use data from Bitfinex / Bitstamp / Kraken / Localbitcoins to get an average price.  

So there are not one single entity deciding the Bitcoin price... they look at the trading data to determine the price. You can determine your own price, but there has to be someone willing to buy it at your price to make the trade. 

This is always possible, supply and demand and that is what we expect of Bitcoin right now as we all know there will be only limited Bitcoin that will circulate in the future.
But you should also consider some market manipulation in the market right now, especially in Bitcoin which still has still low market cap compared to other assets. So there can be some group of people/entities that can manipulate somehow the price of Bitcoin by just a small percentage and make money through it.

Predictions without technicals are just bullshit, but if predictions are made using technical analysis and fundamentals, it should be used as a reference for determining the price of bitcoin. Predictions are not 100% accurate but will help to know the price limit of a coin. Currently the market is bearish, we not only wait but we also have to be prepared to buy at lower prices.

Nobody can predict what will be the price of Bitcoin tomorrow or the following day. Bitcoin price can go down or increase at the same time.

The price that you see when google is basically determined by the rates in exchanges through which the Bitcoins have been bought.
And if you wonder how does the price fluctuates or goes up and down?
Then my friend, you might have heard the policy of supply and demand. Same happens with Bitcoins.
A fixed supply or amount of Bitcoins already been developed, so when the demand of the coin is high, the price of the coin increases. Reverse happens when the demand is less and people starts selling, so the price also comes down.
Hope I have cleared some of your doubts OP.

I don't know what you're exactly saying here, your post really doesn't make any sense.  Yes bitcoin is decentralized but that doesn't mean that it's value can't move up or down. It works the same way as anything that is bought and sold on an exchange.  If more people are buying bitcoin versus selling bitcoin that it's value will go up, if more people are selling bitcoin versus buying it, the value will go down.  This is how all exchanges work, decentralized or not.

I think that's pretty much obvious not just bitcoin but the price of everything comes from supply and demand in some markets, because of being centralized and being under control by the governments and some organizations they can set a price by a single order to market so they can get control over it or they can maybe they will get a price range and the price can move on that price range, while because of being decentralized, none can control the price of bitcoin and it's changing because of supply and demand.

It works just like anything else in the world: supply and demand. If more people want to buy the price goes up, if more people want to sell the price goes down. No one "says bitcoin's value", people decide that.

Bitcoin is open source, meaning it belongs to no one and belongs to everyone at the same time.
the market law of supply and demand, and to be more specific how many trades are made through bitcoin, how many people buy bitcoin, how many people sell it and that's what makes the value of bitcoin go up and down.
and people create value and bitcoin belief that it will be a big technological breakthrough in the future, not bitcoin but blockchain technology behind it.

I don't know at the first place who told you that the price of Bitcoin will hit $40k when we all know that the price of Bitcoin is mostly based on prediction. When need to predict what the price of Bitcoin will be from few months to years coming. We know that the price of Bitcoin is based on liquidity created for the contineous flow of Bitcoin.

And who told you that it works like that? No asset that is freely traded works like that, there is a process that is called price discovery that is what determines the price of an asset.

Basically it is based on perception, a transaction between a buyer and a seller does not happen unless the buyer and the seller both think they are getting a fair price for an asset, this process happens over and over again all over the world and this helps determine the price of an asset at any given time, however due to different circumstances that perception changes which changes the demand and the supply and it is what causes the price to go up or down, as the perception of what the buyers and sellers think it is a fair price is always changing.

The value of bitcoin is determined mainly by market sentiment. The comparative prices of different crypto currencies and market supply and demand.
I think you should also understand the concept of he value and valuation. Value is the price, at which you can currently sell your bitcoin, but valuation is the value that market ascribe to the bitcoin based on its market evaluations

I see the price of bitcoin is in the hands of the big whale if the big whale lost faith in bitcoin and they sold all the bitcoins in their wallet would the bitcoin price be that expensive now? Of course the answer is that bitcoin will no longer be worth it.

I feel every investor is a key player in determining BTC price which is just a clear picture of demand and supply. With the question you have put across, it makes it look as if there is someone up there responsible for determining whether this week it should be $40k or $42k next week.

the price of bitcoin comes from its many supply and demand transactions and it has become a law in the world economy even.
so the more people interest in bitcoin then the holder has the right to determine their best price

I can understand how newbie the question is because I was once wondering too when I have no idea about how the market works. There is no one up there on the clouds with a long white beard deciding how much the price will be.

The orderbook type exchange is a good visual way to really make you understand it for it displays buy and sell orders of the traders. The price is normally what BTC sellers are willing to sell and if a buyer agrees to pick the order, then its the market price.

Simple and precise illustration that says it all!

In a single phrase, we can say, the price of bitcoin is determined by you and I using our buy and sell order. Not the exchange or any other governing body as there is non in the case of bitcoin  but yourself and myself. Most of the crypto transactions we do is with or without an escrow of which, exchanges often serve in that capacity but once we are able to agree at a price, we can transact with that price.
Having someone or a body to decide its price means centralisation to it and bitcoin isn't about centralisation. Its the most decentralized of all cryptocurrencies.

It's almost the same as most commodities out there, where scarcity and surplus gets to play a role to its value with each buyer and seller getting to value it as they see fit due to prevailing circumstances.

IMO, I believe everyone can speculate and predict the future Bitcoin price, But nobody can control it. Because the price was purely based on the supply and demand, meaning the traders are dictating the price on a daily basis, and the buy and sell movements can affect the daily price volatility of Bitcoin and other cryptocurrencies in the market. And if the market has a bearish sentiment which results in fewer bitcoin buyers we can expect the Bitcoin price to go down, but if the market is Bullish in sentiment meaning there are a lot of potential buyers we can expect that the Bitcoin price will go up because the demand was there.  

I think there is no harm in predicting the price of bitcoin, and no one will be able to prevent you from this, because it is only a prediction and not a decision to set the price of bitcoin, which decides the price of bitcoin is the market itself. After all, we all know that Bitcoin is always decentralized, of course, the price according to the buyer's request can be concluded that the price of Bitcoin depends on the supply and demand that occurs in the markets, of course.

Actually you have answered your own question, namely you know that no one can control the Bitcoin.

Bitcoin is a decentralised means of exchange and it’s finite. The price of bitcoin or worth is determined by its supply and demand, number of competitors. Also it is affected by regulations and media coverages amongst others. So no one knows or can tell the price the bitcoin will be in a particular time but can only predict it to be a particular amount looking at the way the market is operating at that point in time.

Therefore, don't believe too much in a prediction because everything is just words that can be right or wrong.
Let's go back to our own beliefs, even though many whales manipulate bitcoin prices, but bitcoin prices for now still can't rise and we can only wait and wait.

The statement about decentralization is very true, no one will be able to control the price of bitcoin. But for people who say tomorrow the price of bitcoin will hit $40k, $100k or some other price it's just a prediction and the predictions made won't actually happen, maybe just close. It all depends on Fundamentals and depends on supply and demand.
Whales also can not fully control, but wahles can do a lot of manipulation to influence the price.


source: https://dotnettutorials.net/lesson/supply-and-demand-trading/

thank you very much for the answers, I had an intuition. The truth sometimes frustrates me to be almost since 2012 in forums learning about the Internet and never having bought bitcoins, because I really appreciate the philosophy of this currency and many Internet communities and this forum that are always willing to help.  Many people don't care about that and just want to get rich with the currency and then exchange it for fiat money. I think in the future bitcoin is going to be used to pay for very good and kind things that people who have fiat money will not be able to pay for, in that sense I do get excited about having bitcoin coins.  It has been clear to me what must happen for the price to change and I really liked the answers, also if someone wants to donate something I have created a new wallet bc1q0ew6jtj4swmf2ylf9yqeq7wp7xm3j9w3tqwvg5 since in 2018 I think, I received a payment of 0.0002 but my cell phone was damaged and I can not recover my key, I will take care of it a lot.

The demand increases, the price goes up, in many cases by people who want something different from the unfair and unequal fiat money, so is it not possible that the demand goes up and the price goes down ? so that all those who do not have the resources to acquire the potential can acquire it in an easier way ?

You got tge wrong idea friend, people said that bitcoin will be 100k or we 10k tomorrow is just a person who predict not control or decide the price, people are free to say whatever they want not just about bitcoin but every stuff in the life, bitcoin is decentralised and it will be desensitized forever

Of course, bitcoin is decentralized and the price is not determined or approved by anyone, it depends entirely on supply and demand, this law is not only on bitcoin but on everything, meaning if the demand for the purchase of a commodity increases, this will lead to a rise in its price, there is a famous incident in history known With the tulip boom or the tulip madness, people started to buy tulips in a frenzy, which led to an insane increase in demand for this flower and a fabulously high price, this is how things work.

Bitcoin is a speculative asset and that's why anyone can give the price the way they look at it. True, no one controls the price and that's why if someone says that it's going to be at that price then that's his opinion and there's a probable analysis as to why it's going to be at that price by now.
Everything on the market relies on the supply and demand and that plays a big part to the motion of prices.

Would you ask who is the person that make the price of your local commodity increase or decrease, because no matter where we are from we all have that commodity that either increases or decreases, this is very normal and most times it has to do with, supply chain and demand, when the former is higher than the later the price decreases and if the later is higher than the former then the price increases, this is naturally how the system works although some people can control these chain but they have to be whales to do so.

It's unrealistic someone would buy at that price now, but such a trade would only affect the price on binance, not the global market as there are many other exchanges.
And this would only affect the binance last trading price, up till the next trade is completed.

In summary: Buyers and sellers.

Bitcoin doesn't differ much from every other asset, product, commodity. It has a demand. It has a supply. It has an equilibrium price. It has a equilibrium quantity. Whenever the demand for a product increases, so does the price and the quantity that the buyers and the sellers agree upon.

For example, if people suddenly want to get rid of their bitcoin, because, say, they feel anxious about what's happening in the world, they will be willing to sell it lower than the price they were willing to sell it previously. That's a decrease in demand, which will drop the price.

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One cool thing that's different in bitcoin is the production. Normally, if the demand of a product increases, so does its P_E and Q_E, and if the supply of a product increases, the Q_E does too, but the P_E decreases. This means that if there's a concurrent increase in both the demand & supply, P_E is counterbalanced.

The supply curve of an inelastic product, such as diesel, looks like this:


The supply curve of bitcoin is perfectly inelastic*, parallel to the Price Axis:


That's because the supply of bitcoin cannot be altered due to a change in the price. There will be 6.25 BTC brought into circulation every 10 minutes, then it'll be halved to 3.125 BTC etc. Therefore, when there's an increase or decrease in demand, there's nothing else that can equilibrize the price. That's one of the reasons it's highly volatile. 

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*Note: Again, for the sake of simplicity, we can assume the supply is the coins in circulation and not the exchange's liquidity.

Does it mean that if I create a seller account on binance and I set my bitcoin to the value I want for example 70 thousand dollars, if someone buys it at that price then the bitcoin will go up worldwide to 70k or only on the binance website?

there are dozens of exchanges. with millions of people. they compete with each other.

usually if one exchange is cheaper than the other. a competition of 'arbitrage' plays in wher epeolpe withdraw from the expensive exchange and deposit into the cheap exchange and buy it cheaper to then sell on the expensive.

this eventually levels out the exchanges to be nearly on par with each other when sudden price events happen on one exchange

and thats where people then see a good 'price' representation, when lots of exchanges are showing similar numbers
......

an exchange has a list of people selling coins, they go in order of price. meaning the guy with the lowest sell price gets his order filled first.

an exchange has a list of people buying coins, they go in order of price. meaning the guy with the highest buy price gets his order filled first.


EG if the current top buy order was $29,700. and lowest sell order was $29.701 you cannot just put an order to sell at $22k and it fills and changes the price immediately to $22k

what would happen is your sell order would go to the buyer at $29700. and you would have to have ALOT of coins to THEN fill all the buy orders inbetween from $29700 all the way down to $22k
and you would be stupid to be trying to sell so many coins down the price especially if you bought/acquired the coins for more then what your willing to sell for.
......
as for value(not price)
over the expanse of multiple years of acquiring bitcoin from users. people dont want to sell for less than they acquired it for.

so if the cheapest mining on the planet this year is about $25k/btc none of the miners anywhere on the planet would dare sell for less than $25k.
as for just investors. yes some are 'old timer' / 'early adopters' but the majority are newer investors that regularly buy and sell

so when someone sold some old 2012 mined coins in 2018. the purchaser of the coins buying in 2018 sets his acquisition cost at the 2018 price NOT THE 2012 price.
so even though the coins were originally mined in 2012 at $6 they are now valued by the current holder in 2018 for alot more and he wont sell for less then he bought them for in 2018

this causes a nice support line of most investors and all miners valuing coins above $25k this year
with certain percentages of people in different situations having coins acquired for alot more thus not going to sell for less than $30k-$70k and simply holding/hoarding and waiting for the price to rise
and very very few 'early adopters' left with coins actively in exchanges willing to sell below certain support value amounts

as time passes and mining costs increase and the 'realized utxo value' increases. this 'bottomline value' increases. which raises the support of the bottom no one wants to sell below.

the PRICE sits ABOVE this bottomline value. (not seen on exchanges, its a hidden wall no one wants to break and fall below)

as for any predictions of the next PRICE, the next high, the next speculative bump the next volatile movement .. well thats just speculative competition above the bottomline support which is not predictable

The price you see on cointrackers is determined by a curation of last sales on different exchange platforms.

Exchanges have buy and sell orders set to specific prices which the buyer wants to buy at or the seller wants to sell at.

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• Mr. Bob puts 1BTC up for sale at the value of $29,700 on binance, that's the price he wants to sell at,
• Mrs. Jane takes up his offer and buys his bitcoins in exchange for $29,700,
• Once the sale is confirmed, that would be the displayed Bitcoin price on binance, until the next trade that is, this is why the value is always changing.

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Coin trackers like CMC and coingecko check the current trade price on several exchanges to arrive at an average, which would be their displayed bitcoin price.
No one controls this system, it is purely community based (decentralized).

Bitcoin is not regulated by any financial authority, so its transactions are irrevocable. Technically the price of bitcoin is mainly determined by supply and demand, other factors can influence the price of bitcoin such as regulations and reputation.

I think you have just answered your own question there mate,nobody controls the bitcoin price its purely speculative (basically reflects speculation on its future value ) and up to the market  to decide.

Is that something serious? Can't you predict tomorrow Bitcoin will be $40K? I think you can and we can't prevent you. Usually, people predict Bitcoin prices. It doesn't mean they control the price, no matter who predicts. Bitcoin is always decentralized and the price will be based on buy pressure. Mean depends on demand and supply, to be honest. Nothing wrong to predict, just do your own diligence.

who is the person who says that today it should be worth 40k and tomorrow 42k? isn't it something decentralized that nobody controls? who agrees on the price to be like this?