What Influences Bitcoin Prices And Fluctuations?

Bitcoin has reached a new high this week, trading at around £91,000 on Bitstamp after a sudden spike in activity. The price had moved between £85,000 and £88,000 for a few days before just pushing past £88,000 in one go. That change, caused by high trading volume, caught many traders off guard.

Earlier in the day, a similar push from £84,000 died out, but this time buyers followed through. With the price currently sitting near £90,000, all eyes are now on the £93,000 target.

What caused the surge? As usual with bitcoin, it’s not just one thing, it’s a mix of scarcity, speculation, demand, and momentum, and it can turn just as quickly.

 

Why Does Scarcity Matter In Bitcoins?

 

There will only ever be 21 million bitcoins. More than 94% of that has already been mined. On top of that, the rate of new coins entering circulation is shrinking. Every four years, the reward for mining new blocks is halved. The most recent halving took place in April 2024, and the next one isn’t expected until 2028.

What this means in plain terms is that bitcoin is getting harder to get. And when people know supply is limited and getting more limited, they tend to want it more. It’s the same effect seen in other markets, like oil or gold, when production slows down.

Over the years, each halving has been followed by a spike in price. This time, the price soared even before the halving happened, reaching record highs in advance.

Bitcoin is known for its very sudden fluctuations. Some days, its price changes by thousands of pounds. That sort of movement draws in speculators looking to make quick gains. But it also means that fear spreads fast when the price drops.

 

 

Social media and news coverage can add fuel to the fire. A glowing headline can draw in new buyers. A negative story can trigger a wave of selling. In this sense, bitcoin doesn’t just respond to cold data, it moves on feelings as well.

There’s also a belief among some investors that bitcoin is the future of money, which keeps interest high even during downturns. When the price starts rising again, people rush back in.

 

How Regulation Adds To The Price Influencers

 

One of bitcoin’s big selling points is that it’s outside government control. But that also makes it more sensitive to news about rules or crackdowns.

In the past, announcements from US financial authorities have caused sudden changes in price. When the first bitcoin-based ETF was approved, the price shot up. Later, when China cracked down on mining and trading, the price really dropped, then it recovered as miners moved to more crypto-friendly countries.

Every time a government bans, taxes, restricts or supports bitcoin in some way, the market reacts.

 

What About The Competition In Crypto?

 

Bitcoin isn’t alone anymore, compared to 2017 when it made up over 80% of the total cryptocurrency market. That number is now closer to 63%. The rest of the space has been taken up by coins like Ethereum, Solana, and stablecoins like USDC and Tether.

Ethereum in particular has drawn attention for powering online finance apps. It now makes up around 14% of the crypto market’s total value. And every time a new coin is launched or gains popularity, it eats into bitcoin’s dominance—even if bitcoin still holds the crown.

 

Are There Other Factors That Influence The Prices?

 

Mining bitcoin uses a lot of energy and hardware. These are real-world costs. If electricity becomes more expensive, or if machines break down or are harder to access, the cost of producing bitcoin rises. And that can influence the minimum price miners are willing to sell it for.

On top of that, liquidity (how easily something can be bought or sold) is a factor. Bitcoin is usually easy to trade, which helps keep its market stable. But when demand goes up or drops quickly, that stability can go away, and prices can fluctuate in response.