The price of a bitcoin is influenced  by supply and demand. When demand for bitcoins increases, the price increases, and when demand falls, the price falls. There is only a limited number of bitcoins in circulation and new bitcoins are created at a predictable and decreasing rate, which means that demand must follow this level of inflation to keep the price stable. That’s to say Bitcoin is mostly influenced by the supply of Bitcoin and the market's demand for it. Also the cost of producing a bitcoin through the mining process. Because Bitcoin is still a relatively small market compared to what it could be, it doesn't take significant amounts of money to move the market price up or down, so the price of a bitcoin is still very volatile.