Which factors influence Bitcoin trading?
Bitcoin is today one of the most valuable cryptocurrencies that are available on almost every crypto exchange site. Even though it didn't have a lot of supporters initially when it was released in 2009 today, we get to choose from an abundance of exchange platforms, but also there is a huge number of investors in BTC. Online trading is an essential part of the success of Bitcoin, and here we explore some of the factors that impact Bitcoin trading.
Bitcoin Liquidity
Early on, Bitcoin wasn't considered a liquid asset. First, there weren't many online trading sites available. Next, Bitcoin was worth only a couple of dollars, and it would really increase in value after the first halving in 2012, but during this period there weren't many investors and supporters in the crypto market.
Later in its evolution, as Bitcoin's price was increasing and there were a huge number of investors, and this has affected the growth of Bitcoin, and it enhanced the liquidity of this cryptocurrency. Moreover, today, most investors can choose from a vast range of reliable online trading sites that utilize cutting-edge technologies. Overall, as the trading volume and frequency of trading is increasing, Bitcoin is considered a highly liquid asset, and this further supports the growth of Bitcoin trading.
Support From Famous Investors
When more famous investors and companies support Bitcoin, the trading sites also attract more visitors. The volume of trading is also going up as the demand is growing. One example is when the famous retailer Overstock has publicly announced that it will accept BTC purchases; this also triggered a rise in the price of Bitcoin of over $1,000 in 2014. Another recent example is the investment of $1.5 billion in BTC from Tesla, which also resulted in a much higher price of over $60,000 in 2021.
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Bull Cycles
Another factor that impacts Bitcoin's trading is its bull cycle. The bull market phases are anticipated to happen usually after a halving event. The event cuts in half the available quantity of BTC, and it also slows down the rate at which new Bitcoins are generated in the market. Therefore, the supply after each halving is minimized in comparison to the demand, which is rising.
When the price was also soaring, not only Bitcoin was gaining attention from the media but also from many reputable institutional investors. More specifically, with the last bullish cycle, a lot of institutions like Grayscale Bitcoin Trust, Pantera Capital, and many others are buying huge amounts of BTC on behalf of accredited investors.
Transaction Fees
Another reason why Bitcoin is popular, especially for trading and BTC transactions, is the low transaction fees associated with this cryptocurrency. Thanks to the distributed, peer-to-peer-based blockchain technology which powers this virtual currency, the transactions are seamlessly processed in less than 10 minutes, and the fees associated with the mining process are negligible. Especially since the block reward is still the main award for the miners, however, when the last Bitcoin is mined, the transaction fees will go up because there won't be any block reward for the miners on the blockchain network.
