Bitcoin prices have been on a wild ride over the past few years. From just a few dollars per coin to an overall-time high price of $64,800 was reached on April 14, 2021, prices have seen some serious highs and lows. So can Bitcoin price be predicted? And if so, what are some factors that could affect future prices?
In this blog post, we will take a look at some of the research that has been done on Bitcoin price predictions, and try to come up with our formula for creating a forecast for the future
Bitcoin Price Prediction: Factors
If you’re thinking about buying Bitcoin, you’re probably wondering if prices can be predicted. Unfortunately, Bitcoin price predictions are not that simple and it is best not to rely on any one sort of information for predictions. While there are some methods that may help you with your forecast, nothing is 100% accurate.
Crypto is a volatile market, which means that prices can change rapidly and without warning.
No financial advice can definitively say whether or not the price of Bitcoin will go up, but there are certain factors that can give us a general idea of where prices might go.
Supply and Demand
One of the first things to consider when trying to predict Bitcoin price is the fact that there is no central authority or government controlling the currency. This means that prices are largely driven by supply and demand, as well as speculation. When there is more demand for Bitcoin than there is available supply, prices will go up. And when there is more supply than demand, prices will go down. This basic economic principle has been one of the main drivers of crypto prices over the past few years.
Adoption
Another important factor to consider when predicting Bitcoin price is market adoption. The more people who use and accept Bitcoin as a form of payment, the higher the prices will be. We are already seeing this happen with more and more businesses starting to accept Bitcoin as payment thanks to Bitcoin ATMs and other high-tech developments. So remember: as adoption increases, we expect prices to continue to rise.
You may want to run a weekly on monthly check of the number of merchants who accept Bitcoin as payment and the number and size of investment funds investing in Bitcoin at the moment. These indicators can give you a better understanding of the market.
Check out the Bitstop Locations page for the latest data on Bitstop Bitcoin ATMs in the US.
Media Coverage
The amount of news and media coverage surrounding a particular coin can affect its price. If there’s a lot of positive news, investors may feel confident buying in, driving the price up. Similarly, if there’s negative news, investors may lose confidence and sell off their holdings, leading to a price drop.
Let’s say you’re reading a lot of new publications about the increase of adoption rates or new partnerships in the fintech industry — then most likely the price of Bitcoin tends to go up at that very moment. However, if there are lots of new wallet hacks or new government regulations, then the price of Bitcoin usually is in a tendency of going down.
That’s why it’s important to follow unbiased and authoritative sources.
Law and Regulation
Finally, another factor that could affect future Bitcoin prices is regulation. Currently, there is very little regulation around cryptocurrency trading. However, this could change in the future if governments decide to crack down on the industry.
As regulations become stricter, it could have a negative effect on prices. It’s important to keep up with the latest legal framework suggested by the U.S. Senate, the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the European Union (EU).
Bitcoin Price Prediction with Analysis
There are a number of factors that can affect the price of Bitcoin, which makes it difficult to give an accurate forecast. However, some analysts believe that by looking at the historical data and trends, it is possible to make a fairly accurate prediction.
Technical Analysis
This leads us to the one popular method for predicting Bitcoin prices, called technical analysis. Technical analysts believe that they can identify patterns in past price movements and use this information to forecast future prices. This method is evaluating investments by analyzing statistical trends gathered from trading activity, such as past prices and volume.
You may have heard of support and resistance levels in crypto price charts. Those are the points where the price has had trouble breaking through in the past. These levels help technical analysts with predictions and give them an idea of where the price might struggle in the future.
Fundamental Analysis
Similar to technical analysis, we have fundamental analysis. Fundamentalists believe that they can identify factors that will affect the demand for Bitcoin and use this information to predict price movements. Those experts focus their attention on economic indicators or political events that can change the market.
No matter which method you choose to follow, remember that predicting Bitcoin prices is a risky business. The efficacy of both technical and fundamental analysis is disputed by the efficient-market hypothesis which states that stock market prices are essentially unpredictable. Always do your own research and never invest more than you can afford to lose.
Historical Analysis
Looking at previous price history can be another factor to include in your overall analysis. Long term trends aren’t to be solely relied upon but can be very helpful when trying to put together a comprehensive analysis of future price predictions. Bitcoin in the short-term is volatile and can move up or down sharply without much rhyme or reason. The long term trend over the last decade shows us that Bitcoin goes up in the long-term compounding at roughly 100% — 200% per year.
Will the price of Bitcoin go up or down?
You probably have heard all the positive predictions believing that the Bitcoin price will continue to rise in the long run. However, just like in any market, there will likely be some volatility along the way. And you should be prepared for it. Bitcoin might be a better long-term hold rather than a short-term quick cash grab.
By analyzing the factors that we’ve summarized for you, you may be able to develop a better understanding of what direction the price is likely to move in and make more informed predictions. Before making any decisions, be sure to do your own research and consult with a financial advisor. This should not be construed as financial advice. Each investor and crypto fan should be aware of possible corrections in price as demand and supply fluctuate, or as news affecting the market comes out.