An Introduction to Bitcoin: Price Drivers and Long-Term Value Analysis

How is the price of Bitcoin formed?

The price of Bitcoin is determined by the supply and demand dynamics of the free market. When buying pressure is strong, the price rises, and conversely, it falls. Investment demand is influenced by fluctuations in risk aversion sentiment, with institutions buying large amounts to boost demand. Furthermore, Bitcoin’s limited total supply of 21 million coins and periodic halving enhance its scarcity, driving up its value. ETFs extend more funding channels, further increasing market valuation.

Core Value Interpretation

Bitcoin features an unstoppable decentralized network and transparent supply rules, contrasting sharply with fiat currencies that can be printed infinitely. Its global circulation characteristics make it a digital store of value for the new era, increasingly replacing traditional assets like gold and the US dollar.

The trend of future development

As global inflationary pressures increase and trust in fiat currencies declines, coupled with the continuous influx of institutional funds, the status of Bitcoin is becoming increasingly solid. Countries like El Salvador have adopted it as legal tender, prompting other nations to follow suit, facilitating Bitcoin’s broader integration into the global economic system.