The value of bitcoin is solely base on supply and demand, bitcoin doesn’t have a physical thing to endorse it, like, for example, gold. This can cause speculation, which can create an economic bubble, creating an unstable market, and it has already happened, but more of that later.
The supply doesn’t change much, but the demand does, since bitcoins are used in illegal dealings since it is almost untraceable, and these illegal dealing could be seized at any minute, for example, when the Silk Road, an illegal market of drugs was seized in March 2015, the price dropped.
One could say that the more people are mining, the supply should increase, but that’s not entirely true, since the difficulty of “solving” the block increases, so that a new block is created every 10 minutes on average, therefore, the increase of the number of bitcoins in circulation is steady.
First years
Bitcoin has a lot of history, a lot of years went by where the value of bitcoin was little to none, and the people who even knew about it were cryptocurrencies enthusiasts. It was insecure and almost no businesses were accepting it, so is expected that the price was minimal and stale.
It wasn’t until 2012 when the bitcoin value started to increase, and some business, especially internet bossiness like hosting companies, were accepting bitcoins. In 2013, the media started covering the usage of bitcoin, thus more people were learning what it was and how to use it.
At the end of that year, speculation drove the price to more than 1100 dollars per bitcoin, this sort of thing is called economic bubble.
Bubble Burst
At the end of December 2013 and January 2014, the price moved like crazy, only to slowly decrease in the rest of the year. In 2015, the price was somewhat stable staying between 200 and 300 US dollars per bitcoin.
Bitcoin value evolution