Unlike fiat money, the value of the bitcoin is not based on government regulations, so it is not backed by the economic stability of the countries, it’s almost entirely based on supply and demand.

bitcoin is susceptible to speculation

That alone doesn’t tell us that it is unstable, so we have to take a look at the factors that affect the price:


No government currently controls bitcoins management, and causes uncertainty and makes it susceptible to speculation.


There are relatively few companies that sell their products with bitcoins, when there are more people buying with bitcoin, the demand increases, this increasing the price.


This might seem an obvious factor in bitcoin’s value being so volatile, but the truth is, no matter how much people are mining, the number of bitcoins generated stays the same, since some rules were established in the beginning of bitcoin so that a new block is created every 10 minutes.

The thing is that some miners, hoard large amounts of bitcoins and sell it all in one huge chunk.

bitcoin price is volatile

News and social media

It might not seem like much, but the social media and the news could affect the value of the bitcoins, for example, an article saying “bitcoin price may triple in the next month”, could cause a large number of people buying bitcoins to sell later, increasing the price by a large margin.


A person selling 1 bitcoin does not affect the price in a noticeable way, but if someone, or some company sell thousands of bitcoins in a short amount of time, the price will lower significantly, depending on the amount of bitcoins sold.


This is probably the main factor in defining the price of the bitcoin, if there is no one willing to pay a certain price, it will have to decrease and the opposite happens too, so, in a certain way, it is you who establishes the price of bitcoins.