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It is mid-October, and the price of Bitcoin is around $19,509. If we take a short historical journey, the same Bitcoin exceeded $68,000 sometime in November 2021. A typical investment perspective should be a red flag because of the significant price drop. But a more in-depth analysis shows that Bitcoin holds high value.
The price of Bitcoin is highly volatile, just like all other cryptocurrencies. And this means that the price keeps changing every time. It can increase or decrease at any time and at any margin. While no investor likes to hear the price of Bitcoin dropping, the reality is that this is one of the reasons they are investing in this crypto. If they buy low and sell high, they make a good profit.
Bitcoin is a high-value digital asset. Its value keeps growing in general, and experts project that it will keep growing in the future. And this should encourage you to invest in Bitcoin today. You can start from the BitIQ platform for trading Bitcoin. Visit the quantum ai app and register for free. Several factors make Bitcoin so valuable. This article explores three of these factors.
Limited Supply
Among the main reasons behind the high value of Bitcoin is the limited supply. Miners will generate only 21 million Bitcoins, meaning there will be no more new ones entering circulation. Miners have already produced over 90% of the 21 million Bitcoins, leaving a small percentage.
With a growing population of the world turning to cryptocurrencies, it means that 21 million Bitcoins cannot meet the demand. Moreover, some Bitcoins have already been lost through users losing their private keys to their Bitcoin wallets or death. The law of demand and supply posits that when availability is limited and demand is high, the price of a commodity will increase. Bitcoin’s fixed supply vis-à-vis a surging market keeps its value high.
Institutional Investment
Bitcoin has two categories of users- that is, individuals and institutions. Individual users form the most extensive base, often making small investments. However, there are institutional investors with greater investment power. With growing trust in Bitcoin, more institutional investors are now investing in it, which has a significant implication on its value.
As the number of institutional investors in Bitcoin grows vis-à-vis the individual investors, more money will go into this market. And this will drive the price of Bitcoin even higher. Moreover, institutional investors command more respect and trust than individual investors. When they invest more in Bitcoin, they enhance their trust and confidence in the asset, which boosts its value.
Growing Demand
There is a growing demand for digital currencies globally. With the world shifting to the digital era, there is an urge to follow suit, even in the financial sector. Consumers and providers of financial services are increasingly adopting digital currencies to ensure they are not left behind.
Bitcoin is the leading cryptocurrency. The growing demand for digital currencies will benefit the most popular cryptocurrencies first. And this means that as demand for digital currency surges, it will also drive a rise in demand for Bitcoin, ultimately driving the increase in value.
Conclusion
Bitcoin has no stable value because of volatility. However, it is a high-value asset compared to conventional asset classes, including gold. The potential for Bitcoin’s value to rise even further is huge. Although the price of Bitcoin is affected by various macroeconomic factors, including global geopolitics and economics, the limited supply, growing demand, and increased institutional investment currently account for its high value.
