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Bitcoin Market: What are the forces driving the bitcoin market?

2019-12-14 11:02:45

Mercado Bitcoin will be the backbone of this article and explain objectively about forces driving the bitcoin market.

On December 3 a study was published by Coin Metrics, which deals with the behavior to analyze the Mercado Bitcoin and the prices of this Criptomoneda, in the analysis evaluates the forces driving the bitcoin market, including the psychological examination of investors, this led to the answer that greed, fear and other cognitive biases have great forces driving the bitcoin market, and if we want more information, the following content will help us to have more knowledge regarding what happens in the Mercado Bitcoin.

What should we know about the forces driving the bitcoin market?

In the Mercado Bitcoin there are behaviors worthy of studies, like the one carried out by Coin Metrics, where its analysts chose 3 points, which are the bubble peak, in relation to the minimum price that has been recorded, and then also took into account the correction of a cycle that led to the implication of the significant decrease after having recovered, cognitive biases are one of those forces that drive the bitcoin market, is due to the speed of information processing, which leads to act accordingly, in whether it has to do with the way our brains analyze what they perceive, leading to a decision even automatic according to instinct.

This being a new current of economic thought discovered a few years ago, which deals with the study of behavioral finance, leading to a theory that indicates that human beings are not so clever or rational when it comes to making financial decisions, this is very much in keeping with the nobel of economics Richard Thaler.

What are the forces driving the bitcoin market?

  • - Greed vs fear

Among the forces that drive the bitcoin market, greed played a very important role in the 2013 cycle, which showed that the Bitcoin headlines continued to rise and that as you were close to the bubble, so the rising price maintained, in a few months this step from 100 dollars to 1100 dollars, here the long-term incumbents remained in possession of their assets, while the new entrants began to buy, the instant Bitcoin approached the $700, the pressure that caused the sale was futile, which made the previous holders have huge profits.

I touch waiting for the Bitcoin to reach 800 dollars, which caused a movement in the Mercado Bitcoin, the focus in 2013 was due in the direction of high costs then, the positive momentum slowed when the headlines began to liquidate their positions, the lack of buying interest does not enter the forces that drive the bitcoin market, because the bubbles do not run out, as it is encouraged for the Mercado Bitcoin to reach the trends that it came to have at some inactive time.

In that sense in 2013 the investors who bought in 800 dollars and in the case of those who did business for less than 150 dollars, have the peak of another of the forces that drive the bitcoin market, fear, this is due to the fall in prices, which caused it to be sold to an investor, in which his intention was to buy at a low price, the study indicates that there is a certain limit for investors, in terms of selling pressure, which leads to a state of surrender and then a fall in prices, which in turn affects optimism, relief and denial have an important role with it, the mood of investors may be the greatest driving forces of the bitcoin market.

  • - Human emotions

Nowadays, the same behaviors of the past are reflected, in which there were few sales among buyers, those who did it for 1000 dollars up to the high level of prices reaching 16000, the meaning of this is that the headlines were ready for the long term, in the same way as in 2013, before selling it was waited until the profits became maximum, in 2018 the decline of the BTC was important due to the fall of 84 percent, clear despite this there was a group of 39 percent of holders who despite the downturn made profits in the same way to 43 percent of buyers in 2015.

The selling pressure between buyers at maximum prices, was noted when the price fell to $3,000 dollars, again the same as happened in the previous cycle, this reflects the role of the forces that drive the Mercado Bitcoin as human emotions, for bubbles and errors, at this stage the difference is different by the adjustment of prices in the middle of the cycle.

It is reflected in the study of Mercado Bitcoin, the change in distribution that occurred between June 26, 2019, in which prices reached 12863 dollars and November 25, 2019, when there was a drop to 7139 dollars, which led to demand to fall to 50 percent, at this stage you should know that the price pressure also comes from investors, among those who are the first to buy and what arise during the fear of being left out.

With this could be expected that the Mercado Bitcoin suffer new falls in prices, due to the current cycle has longer time for it to develop, to reach an effective correction, halfway through the cycle the price is between 7000 dollars, not being the correction indicated and by them the movement of the Mercado Bitcoin becomes very unstable.

End of the discussion of Mercado Bitcoin, the content of this article showed those factors that become the driving forces of the bitcoin market, we hope that this content fulfills its role.

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