Hello readers, welcome back to BlockchainAPI blog, today we are going to discuss some of the very crucial questions people around the world asking in regards to Bitcoin trading. Without further ado, let’s begin.
1. Bitcoin is skyrocketing right now, so what are the technical indicators a regular person should look at to decide when to buy or sell in the current market situation?
It's an interesting question. A lot of people ask about what indicators are good to predict where Bitcoin is going next, but the one thing we've seen over the last few months is that pretty much no signs right now are telling us where bitcoin is going. If you take a look at technical indicators, all of them have been showing over-purchased signals for Bitcoin, but we continue to see an uptrend in bitcoin price. And even on very fundamental indicators which have been used by a lot of people in the cryptocurrency trading over the last few months, those are not really giving us a viable option to determine when bitcoin price is going to rise and when we can expect a correction in price. So we recommend you to stay away from using any major technical indicators right now and rather rely on your own budget and capability to hold. If you look at previous histories, like how bitcoin moves in its past, you will definitely able to predict some of its behavior, but again, do not rely on the major technical indicators alone.
2. Can you explain how the price of Bitcoin gets determined and should I be worried by the frequent fluctuation of the Bitcoin price?
Have you ever rode roller coaster ride in an adventure park? If you have, you might understand how it feels to trade Bitcoin. In just the last 4 months, Bitcoin’s price rose over 8,000 dollars only to fall a little more than 2,000 dollars in the last 15 days. A twitter-verse full of financial advisors all have their theories but we here felt it was time for a more clinical approach. So, what exactly are the factors that influence Bitcoin’s price?
Demand and Supply: This one is a major factor. Bitcoin does not have any physical existence in the real world, and it is sold on entirely on exchanges. We know what the main principle of economics is - that if people start buying a particular currency or for that matter anything else, its price rises, and if people start selling it off, its price falls. And this rule applies to Bitcoin too. That is how we find ourself in the world of bulls and bears and whales (The people who hold most of the bitcoins are called whales). The total amount of Bitcoins is 21 million (this is the maximum limit the miners can ever mine), but they are produced with time. Currently, there are about 17 million-plus Bitcoins, and there are more than 14 million people who have bitcoin wallets with Bitcoins. The number of people who own some bitcoin and the number of wallets which hold some bitcoins are multiplying rapidly every year, and since the number of Bitcoins can ever be mined is fixed, the price will continue to grow up.
News and media: A human factor is involved in the fluctuation of Bitcoin price, meaning the way people can react to the news and global events. This type of news has been dubbed FUD by the cryptocurrency community which means ‘fear, uncertainty, and doubt.’ When FUD hits, the price of Bitcoin inevitably takes a hit as well, as it was seen in January of 2018, when news of Korean regulation hit the papers.
Regulation: Globalization is a crucial aspect here, events and decisions in just one country could have a direct influence on the various other parts of the world. For example, when Japan accepted Bitcoin as a means of payment in their country, the price hiked significantly just in a period of a few days. The greatest problem with predicting Bitcoin’s price is that the factors which influence it are hard to predict. Because of this, we recommend that instead of trying to predict the whims of the world in the future, look backward. Look at the financial crisis of 2008, look at governments who keep a stranglehold on the poor and the hyperinflation that impacts countries all over the world. Look at the way money has been handled, manipulated, and abused over the past 100 years. If you do that, you’ll stop worrying about Bitcoin’s price and start being hopeful for how it will change the world.
3. Is Bitcoin our future, and if yes, how it will impact our current economic system based on regular currencies controlled by governments and banks?
This is another interesting question, and probably the most vital one. The thing is, Bitcoin or cryptocurrencies are very new in our financial market; hence, most of the financial experts or governments seem not to be worried very much of its existence. Surely many governments around the world imposing various rules and regulations, and some are even banning cryptocurrencies outright – those are merely some ripples rather than tides or waves in the ocean of world economy. As of today, in most of the countries, people are buying, selling, and trading cryptocurrencies freely as they wish. And other than imposing some strict regulations, governments seem not caring much about it. But, then the question arises, does Bitcoin really matter on a large scale? Is Bitcoin really a game-changer?
Let’s look from the perspective of the people who matter to the world economy. The people who are billionaires, who are company CEO and directors, the people who hold most of the world’s wealth – we are not talking about them. We are talking about people like us, the consumers. We are the people who matter to the economy because the economy flourishes when we consume, and it collapses, when we don’t. So, what matters to us? Control, transferability, and acceptance – these are the three most crucial things which matter to us, the consumers, most.
Control: Back in 2016, the world’s largest democracy India, faced drastic financial chaos when the Indian government chose to demonetize the banknote and introduce new notes in the economy. Though the reason stated by the government was to get rid of black money, most economist and financial experts agreed that it did little on that front, rather brought down one of the fastest-growing economies of that time to its knees. Millions of people were standing in queue hour after hour in outside of the bank counters just to withdraw a small portion of their own money, and millions of people lost their jobs due to that one decision of the government.
Now, should people have bitcoin instead of regular currencies, would the government be ever able to take such decision to make your own hard-earned money valueless just overnight?
Transferability: If you ever tried to transfer your near and dear ones some money in abroad, or received from them, you’d know what we are talking about here, and why the transferability matter to us. In an ideal situation, you should be able to transfer money without giving any explanation to the authority or having to follow any lengthy process, but that’s not possible in our current financial system. Bitcoin fills this void effectively, so much so, that you can literally transfer even millions of USD within seconds to anybody no matter at which place or country he or she is right now.
Acceptance: In our present system, USD (and Euro, up to some extent) rules the world economy, making the USA in the leading position when it comes to controlling various factors of the world’s economy, making the playing field uneven for other countries unfairly. Though it’s probably too early to say that with the rise of bitcoin, the world is heading towards one currency, the possibility is real.