What Can Cause a Bitcoin Crash or Drastic Price Change?

It is rather difficult to determine whether something different would cause a crash, soar or fall in price, but most would agree that there would be no difference. Price is determined by the rules of supply and demand. In this regard, Bitcoin is similar to any other market. When supply is high, prices will generally be lower. When demand is high, prices generally go up. Price also has an impact on the supply and demand itself. When prices are high, more people seem to want to invest, which makes the price go up even more. Once the price gets high enough, people start selling in order to profit from the rise, and then the supply goes up. This causes a price decrease, which typically causes a demand decrease, and this decrease is how a crash occurs.

There are many factors that influence the price volatility in the Bitcoin market. The most important factor when it comes to the market and the network is the adoption rate. Adoption rates influence demand, but also the mechanism itself because Bitcoin relies on its users for proper functioning. Adoption rates are affected by media hype that occurs when there are big changes in the Bitcoin market. Besides that, the political climate is also very important when it comes to adoption rates of the general population. If something is presented as illegal, or potentially illegal, most people tend to avoid that thing. That is why we can often see government officials creating a negative image of the cryptocurrencies. Cryptocurrencies go against the centralized monetary system. Also, hard forks that frequently happen cause changes in the market and are often seen as turning points. Bitcoin Cash is one of the reasons for the current price drop. It is clear by now that there are many factors involved in price changes and it is hard to determine which factors are essential and if timing makes an impact.



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