How is Bitcoin valued? How do you track the value of Bitcoin?
How is Bitcoin valued? How do you track the value of Bitcoin? Bitcoin is a major digital currency or cryptocurrency. Unlike the dollar, euro, pound, yen, peso and other government supported currencies, cryptocurrency is not officially supported by any central bank or government. This currency has traditionally been traded in an open market similar to the stock market, where buyers and sellers can convert local currency into Bitcoin, and vice versa. Although the prices of the trading platforms hosted by some cryptocurrency exchanges are slightly different, the overall market price of Bitcoin is the latest price of transactions. However, the value of Bitcoin is very different, depending on the investors - some people say that the intrinsic value of Bitcoin is much higher than the market value; Some people say that the intrinsic value of Bitcoin is much higher than the market value. Others claim that Bitcoin may not be worthless. Now let's learn how the price of Bitcoin is set, how to interpret its value, and how you can participate in the latest Bitcoin action.
Who sets the price of Bitcoin?
The value of Bitcoin is determined by the same market forces that affect the value of any other goods or services. If more people want to buy than sell, the price may rise. If there are more sellers, prices tend to fall. This is similar to the stock market, real estate and most other open markets.
The fixed maximum supply of Bitcoin is 21 million coins, creating nearly 19 million coins. This concept can be compared with the tradable shares in the stock market.
When the open purchase order and sales order meet at a common price, the order will be executed. The final transaction price is the current Bitcoin value. You can use websites like CoinMarketCap or public blockchain browsers to find the latest Bitcoin prices. This is a website that allows anyone to view any Bitcoin transactions that have occurred.
You may find that some exchanges list different Bitcoin prices. This is because some exchanges operate independently of the open market and only serve their members, so the price may be slightly different from the overall market. Sometimes this is beneficial because you can buy Bitcoin without paying the network fee, which may be higher than the exchange fee. In addition, the bitcoin price of some exchanges may be slightly higher or lower than the market price due to the "price difference" between buying and selling prices.
Value (price) and valuation of Bitcoin
When buying or selling any financial product, it is important to distinguish between price, value and valuation. This value is the current price, or the price someone is willing to pay for something now. Valuation is a complex investment analysis.
The value of Bitcoin is the current market price; Its intrinsic or actual value is difficult to determine.
In the stock market, analysts review the company's financial performance and stock market prospects - the results are quantified and then rated using indicators accepted by the community to determine the actual value of the stock. These indicators can then be compared with the performance of other stocks to obtain relative value.
Bitcoin can be compared with other cryptocurrencies to obtain relative value. However, it is difficult to compare the intrinsic value of stocks or bonds with Bitcoin because they are different instruments.
It is important to note that investment valuations are different from investment values. Intrinsic (absolute or actual) value is a term commonly used to refer to the value determined using analysis and valuation.
Value is relative to investors. If Bitcoin meets your investment objectives and risk tolerance, and gives you the return you want at the price you are willing to pay, then this price is its value. This is the market price you see when looking for Bitcoin prices.
Factors Affecting Bitcoin Price
Bitcoin is a relatively new and unique asset, so the future is often considered uncertain. Although it has a history of about ten years, it is still a wild western border in many aspects, and the future regulations are still uncertain. Although the value of Bitcoin may exceed $100000, it may also fall to zero.
The single biggest factor that may affect the price of Bitcoin may be government action. Regulators in the United States can implement new laws or regulations that strictly restrict Bitcoin and even make it illegal.
In terms of cryptocurrency regulation, the Federal Trade Commission, the Commodity Futures Trading Association and the Securities and Exchange Commission are the main government regulators. As cryptocurrency is not yet regulated, it does not have the same legal or privacy protections as dollar based accounts and securities.
External influences will also drive up the price of Bitcoin. For example, Tesla CEO Elon Musk's tweet had an impact on cryptocurrency market prices. Catherine Wood, CEO of Ark Invest, is another major Bitcoin advocate, and she may help lead the market upward. In addition, early investors (sometimes referred to as the Bitcoin Whale) who hold large amounts of Bitcoin can control the market by conducting large transactions.
It is important to understand that investing in Bitcoin is highly volatile and risky. Although you can buy Bitcoin and get rich returns, there is also a risk of significant losses. For most people, it is best to limit your Bitcoin investment to funds you can afford to lose.
How do you track the value of Bitcoin?
The value of Bitcoin depends on your financial situation and investment objectives. Bitcoin prices are readily available through most cryptocurrency exchanges and cryptocurrency news and market websites. CoinMarketCap is one of the larger and better known cryptocurrency valuation and data websites, and also a reliable source of Bitcoin price data. If you have an account in an exchange or brokerage company such as Coinbase, Robinhood, Gemini, Binance, eToro or FTX, you can view the current price in your trading application or online account.
In general, the above content introduces in detail how Bitcoin is valued and how to track the value of Bitcoin. I believe you will understand after reading it. In short, the value of Bitcoin is determined by the same market forces that affect the value of any other goods or services.