Bitcoin price fluctuates so much because it is still in development phase and nascent stage. There are many news and rumours around the legality of bitcoins. Common man is getting to know about bitcoin and thinking about investing in it.There are lot of things happening in the bitcoin and crytpocurrency space. It is still like the little kid going up and down just for the fun of it.Like all things that have a finite supply, the value of a bitcoin is derived by the number of people that want to buy them vs the number of people that want to sell them.  If more people want to buy bitcoins than are currently for sale (for example if a surge of people want to start using bitcoins to transfer value across borders, see more on this below) then the price goes up.  If more people want to sell bitcoins than currently want to buy them then the price goes down.  One of the reasons that the price of bitcoin is so volatile is that many of the people buying bitcoins today are buying based on speculation not because they actually want to use them. Speculative buyers believe that in the future many people will want bitcoins (if this is true these future buyers will drive the price up) so speculators buy bitcoins now in anticipation of that future demand and price increase.