What determens the price of Cryptocurrency
What determens the price of Cryptocurrency
Currently crypto-currency markets are quite illiquid. This makes the price of crypto currencies fluctuate a lot. Regulation, technical challenges, reputational issues and other factors make the supply and demand unpredictable.This is something that will change in the future as cryptocurrency evolves and become more and more adopted into our economy and everyday life.
The price of Cryptocurrency is totally based on users’ interest, supply and demand. There is no central authority to fix its price like other electronic or traditional currencies.
Today its fair to say it is based on people's expectations and the idea that most cryptocurrencies has a limited supply. So far its tempting to say that if people expect the priceof a cryptocurrency to increase due to good marketing and a utility increase over time (more merchants accept it, transaction volume grows, there is a larger ecosystem of developers building on top of it etc.) there will be a rise on demand and vice verca. We could say its motivated by profit and fear of loss.
In the long term their value will be determined by their usability and utility (adoption by merchants and other users), liquidity (exchange markets, interchangeability with other forms of value) and trust (reputation, regulation, adoption by trusted institutions). The supply and demand will simply be there because it has become a natural part of the daily life.
Below you can see how the price of Bitcoin, the currently most know and used cryptocurrency, has evoled.
|
Date |
Price for 1 BTC |
Notes |
|
Jan 2009 – Jan 2010 |
basically none |
No exchanges or market, users were mainly cryptography fans who were sending bitcoins for low or no value. |
|
Feb 2010 – May 2010 |
less than $0.01 |
User "las zlo" made the first real-world transaction – he offered on
Bitcoin forum to pay 10,000 BTC to someone who would buy him Pizza. User
"SmokeTooMuch" auctioned 10,000 BTC for $50 (cumulatively) |
|
June 2010 |
$0.08 |
In five days, the price grew 1000%, rising from $0.008 to $0.08 for 1 bitcoin. |
|
Feb 2011 – April 2011 |
$1 |
Bitcoin takes parity with US dollar. |
|
8 July 2011 |
$31 |
top of first "bubble", followed by the first price drop |
|
Dec 2011 |
$2 |
minimum after few months |
|
Dec 2012 |
$13 |
slowly rising for a year |
|
April 11, 2013 |
$266 |
Top of a price rally, during which the value was growing by 5-10% daily. |
|
May 2013 |
$130 |
Basically stable, again slowly rising. |
|
June 2013 |
$100 |
in June slowly dropping to $70, but rising in July to $110 |
|
Nov 2013 |
$350 – $1250 |
From October $150–$200 in November, rising to $400, then $600,
eventually reaching $900 on 11/19/2013 and breaking $1000 threshold on
27 November 2013. Friday, 29 Novemeber it hit the all-time high of
$1,242 (just 2 usd short to reach the same price as 1
ounce of gold that day) |
|
Dec 2013 |
$600 – $1000 |
Price crashed to $600, rebounded to $1,000, crashed again to the $500 range. Stabilized to the ~$650–$800 range. |
|
Jan 2014 |
$750 – $1000 |
Price spiked to $1000 briefly, then settled in the $800-$900 range for the rest of the month. |
|
Feb 2014 |
$550 – $750 |
Price fell following the shutdown of MTGOX before recovering to the $600-$700 range. |
|
Mar 2014 |
$450 – $700 |
Price continued to fall due to a false report regarding bitcoin ban
in China and uncertainty over whether the Chinese government would seek
to prohibit banks from working with digital currency exchanges. |
|
Apr 2014 |
$340 – $530 |
The lowest price since the 2012–2013 Cypriot financial crisis had been reached at 3:25 AM on April 11th |
|
May 2014 |
$440 – $630 |
The downtrend first slow down and then reverse, increasing over 30% in the last days of May. |
|
June 2014 |
$590 |
Price as on 31st of this month |
|
July 2014 |
$562 |
-“- |
|
August |
$502 |
-“- |
|
September 2014 |
$374 |
-“- |
|
October 2014 |
$345 |
Price reached 405 and then dropped. |
|
December 2014 |
$310 |
Price as on 31st of this month |
|
Jan - May 2015 |
$220 - 280 |
After a quick fall down to $171 on Jan 14 (back to approx $250 10
days later) the price seem to stabilze around $250 (+/- 30). The word in
the community is that the price of bitcoin has been pushed down by big
actors on the market, to make the entry more
interesting and possible for the masses. |
|
May - Desember 2015 |
$223-408 |
After hitting low $223 June 1, the market more and less rise every
day until hitting a new high at $408 on Nov 4. Then after a slightly
decrease it seems to establish itself at around $330 |
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