I always wonder How Cryptocurrency rates especially BTC Fluctuate so quickly? I mean is there any system on which there rates are decided? If so, what is it?
Bitcoin's decentralized nature does not allow any system to decide a ceiling and floor for it's price.
Let's talk about the reasons-:
- First reason for such fluctuations is the varying demand of Bitcoin.For example if we talk about gold, we know exactly where it is used and we can somehow predict that when a hike can be observed in it's price.But it is totally opposite for Bitcoin. It's usage is not clear.Sometimes the demand is high and sometimes it is low but the supply remains the same.So that is why we observe a lot of up's and down's in it's price.
- Exchanges are also responsible for these fluctuations. If we talk about any trusted exchange.The number of users associated with it keeps on increasing.It builds a chain of users selling and buying their BTC's which also affects the price.
- Other reasons can be the manipulations done by whales according to their convenience, news regarding BTC on various platforms etc