Bitcoin is the first and most popular cryptocurrency known. Launched in 2009, Bitcoin offers numerous advantages including anonymity, decentralization, and value appreciation. Unlike fiat currencies whose value is determined by a central authority, the value of Bitcoin is determined by various factors, which we will be discussing in this article.
What is Bitcoin?
Bitcoin is the largest cryptocurrency, operating on the Bitcoin blockchain. Being a decentralized currency, Bitcoin eliminates the need for intermediaries, thus reducing transaction costs and improving transaction speed. It can be utilized as an alternative to fiat currencies or as an investment using crypto exchanges.
Factors determining the Bitcoin’s price
Being a decentralized coin, Bitcoin’s price is not decided by a central authority. Its value is affected by social, economic, and demographic factors.
1. Supply
Supply refers to the amount or number of items produced. When supply increases the price decreases. In the case of Bitcoin, supply is known for all. Only 21 million Bitcoins will be produced in total, and a certain number every year. New Bitcoins will be rewarded at a fixed rate and the rate tends to slow down over time.
2. Demand
Bitcoin is the most popular cryptocurrency, and more people are investing in its platform. Being one of the highly demanded crypto coins, the price of Bitcoin tends to increase. Since bitcoin is capped at 21 million, the upcoming shrinkage in supply is coupled with a tide in demand, leading to an increase in price.
3. Competition
Competition from other cryptocurrencies can fluctuate the price of bitcoin. Though Bitcoin is the most traded cryptocurrency, its popularity has faded over time. It reported a market cap of 80% in 2017, but in 2024 it declined to 57%. This decline is due to the increasing number of crypto coins introduced to the market. Ethereum’s applications in the decentralized finance platform (DeFi) and the increasing popularity of meme coins have laid the foundation for the declining popularity of bitcoins. Tether, BNB, and USD are some of the crypto coins that affect the value of bitcoins.
4. Government regulations
Cryptocurrencies are free from government regulation, hence they promote cross-border transactions. However, regulatory developments can affect the price of bitcoin. In 2021 in the United States, the Bitcoin price surged to $69,000 soon after the Security and Exchange Commission approved the US’s first bitcoin linked ETF, and later the price dropped down to $40,000.
5. Social media and news
A report in favor of a cryptocurrency increases demand, and thus price increases. Similarly, when a report against a crypto coin is published, people get furious and transfer their funds to other assets, resulting in a price decline. Celebrity endorsements on social media create a major impact on the price of Bitcoin. Social media platforms publish any fluctuations in crypto market prices, generating quick awareness among people.
6. Bitcoin halving
Bitcoin halving is the process of cutting down the value of block rewards by half every four years. This is done to decrease the number of new coins entering the market. When the rewards are cut off, the number of new coins decreases. The decrease in coins increases the demand, and so does the price.
7. Technological advancements
Technological advancements can lay the foundation for creating new crypto coins with more advanced features. The newer technology integration offers more security and enhanced adaptability, making investors attracted to the platform. When people shift their investment to other platforms, the price reduces.
Price prediction of Bitcoin for the year 2025
| Month | Min price | Avg price | Max price | Potential ROI |
| January | $ 108,862 | $ 113,561 | $ 118,135 | 22.30% |
| February | $ 102,489 | $ 108,796 | $ 123,566 | 27.93% |
| March | $ 101,459 | $ 112,620 | $ 118,613 | 22.80% |
| April | $ 119,402 | $ 130,494 | $ 138,348 | 43.19% |
| May | $ 135,090 | $ 144,107 | $ 161,297 | 66.90% |
| June | $ 158,327 | $ 158,327 | $ 158,327 | 75.40% |
| July | $ 157,799 | $ 167,320 | $ 174,654 | 80.82% |
| August | $ 156,855 | $ 168,287 | $ 177,384 | 83.65% |
| September | $ 140,171 | $ 140,171 | $ 156,809 | 62.39% |
| October | $ 115,867 | $ 124,831 | $ 138,167 | 43.08% |
| November | $ 110,290 | $ 112,299 | $ 112,299 | 19.19% |
| December | $ 104,997 | $ 109,422 | $ 109,422 | 15.88% |
Why does Bitcoin price fluctuate?
Cryptocurrency platforms are volatile. The decentralized nature of the platform distributes the power among different sectors rather than focusing on a central system. This results in price fluctuation, affected by the market, inflation rates, unemployment, tokenomics, and more.
Final Thoughts
Bitcoin is one of the most traded cryptocurrencies. However, their popularity has waned over the years. This can be due to underlying effects of economic and social issues. The launch of new cryptocurrencies and Bitcoin halving can significantly impact the price of bitcoin. However, the volatile nature of Bitcoin makes it difficult to predict the price. Always be aware of the risks associated with crypto platforms before investing in any crypto coins.