The Bitcoin price, as any investor knows, can move in the blink of an eye. It can go from $ 20,000 to half in a few weeks, and Bitcoin is on a constant roller coaster of price discovery.

Many people wonder what determines the price of this digital currency, especially for an intangible good that exists only on the Internet. Cryptomarket, and Bitcoin in particular, is a commercial hive, and as such, it is this buzz of traders who end up raising or lowering the price of Bitcoin. Nothing new, frankly, but it is worth noting that, as a decentralized asset, it really belongs to people to determine the price.

Discovering this price

With Bitcoin exchanged back and forth all the time on crypto exchanges, the price is in a constant state of flux that these exchanges are currently trying to put your finger on it.

An exchange engages with its users as brokerage and therefore, when one buys on an exchange, the individual is in agreement with the exchange, and he is usually agreed with reference to the last transaction that was made – this leads to price discovery.

Adam White, the general manager of GDAX, says:

"When people say," What is the price of Bitcoin trade? "Or the price of $ 39. Ether? "This is not a company that defines it. This prize is discovered during open exchanges by individuals and institutions that trade with each other.

Fear of Fear

These general economic principles will help to find the price and determine demand, but what is unique in the cryptocurrency ecosystem is the Effect of opinions and news.The FUD anagram has become synonymous with a lower price Bitcoin, and it plays a role.

With such a volatile and shaken market, it It's not surprising that investors in this untested asset are quick to press Get out.So, when fear, uncertainty and doubt start to overwhelm the media, the price usually takes a plunge.

This was pointed out in the recent South Korea fiasco where false news led to FUD.The confusion about a potential ban caused a massive sale and thus affected the price

Buy the rumor, sell the news

On the other hand, another unique way to increase the price of Bitcoin is by a strange phenomenon of buying the rumor and selling the news. This happens when there are rumors of positive changes coming to the Bitcoin ecosystem that see people trying to get ready and ready for a price jump by buying more coins.

However, this purchase raises the price circumstances of demand and can lead to large gatherings. The Bitcoin price rose steadily as the first December maturities approached, but with the launch of the futures, there was virtually no movement, in fact, there was a slowdown. It was the people who were selling the news – the launching of the futures contracts – which went upward

Good old stock and demand

Of course, anyone with a little economic knowledge will know this price is determined by supply and demand, regardless of the asset. This will give a good indication that people are willing to pay to realize the asset. This is also the reason why prices vary on exchanges, as well as on aggregator sites, such as Cointelegraph where the price is averaged over several exchanges.

In some markets, the price may be higher and the latter trade will be all the higher as the desperation of people to turn to a smaller supply will push them to push their price limits. that they are ready to accept

"The Bitcoin Scholarships Manage a Backlog" Christian Catalini, Assistant Professor of Technological Innovation at MIT Sloan School of Management. It's essentially "a list of people, at any time, eager to buy or sell at different prices."

"What they do, is that they match the demand and the supply.And this process of matching the two sides of the market is what leads to the discovery of prices. "

What about the current price?

According to Catalini, it is because of the hype and excitement around the cryptomarket until the end of last year, a correction had to happen. He concluded.

"The space was ripe for a correction after the madness of the end of 2017."

Bitcoin continues to slide, now in February, and it seems to be carried by a lot of negative press – some real, and some less than compelling.

As several countries, including China and South Korea, target a crackdown, Neil Wilson, an analyst for ETX Capital, said:

"Explaining the moves in Bitcoin is always tricky, but this fall … may be the result of recent signs that regulatory pressures are building. "

The Korean repression was a paper tiger and debunked by the highest authority in the country, but bad news marks such a speculative market.

Whatever the case may be, the current price proves that the negative press has a big role to play in the marketplace. And the other side of the coin is the fact of positive news.