Simple (and possibly stupid) Question

[JTPhotography]

I am new to Bitcoin but I’ve been doing a bunch of research and learning. VERY interesting stuff! I invested a small amount a few months ago and I’ve seen my investment triple. I’m cautious but I’m all in and plan to slowly add to my wallet.

One thing confuses me. Who and what actually sets the current price? I understand how things like China taking a negative stand on bitcoin can drive the price down, but don’t understand the very basics of  how the price actually moves. Is it a function of how many people own it at any given time, so as people buy and sell,  the price of a coin increases and decreases?

Thanks in advance for your info!

[1714858911]

1714858911

[1714858911]

1714858911

[1714858911]

1714858911

[1714858911]

1714858911

[1714858911]

1714858911

[cioloxl]

We do. We set the price with our demand.

[Catmony]

One thing confuses me. Who and what actually sets the current price? I understand how things like China taking a negative stand on bitcoin can drive the price down, but don’t understand the very basics of  how the price actually moves. Is it a function of how many people own it at any given time, so as people buy and sell,  the price of a coin increases and decreases?

- Demand of bitcoin sets its price.
- Price moves just like price of other trading assets like gold/silver/oil moves but bitcoin is more volatile because it doesn't have very high marketcap like other assets till now.
- Yes when there will be more people to cashout than price can decrease and if there will be more new people who want to get into bitcoin than it can pump the price hard.

[talkbitcoin]

supply and demand is setting the price. this can probably explain what it means better than i can: https://en.wikipedia.org/wiki/Supply_and_demand

things like China that you talked about affect the market temporarily, these are speculations. in other words some negative news means people will sell their coins, like when China closed exchanges some sold their coins. so speculators expecting this will sell too in order to prevent loss and price falls. but the demand has not gone anywhere that is why price bounces back.

[jc89]

I am new to Bitcoin but I’ve been doing a bunch of research and learning. VERY interesting stuff! I invested a small amount a few months ago and I’ve seen my investment triple. I’m cautious but I’m all in and plan to slowly add to my wallet.

One thing confuses me. Who and what actually sets the current price? I understand how things like China taking a negative stand on bitcoin can drive the price down, but don’t understand the very basics of  how the price actually moves. Is it a function of how many people own it at any given time, so as people buy and sell,  the price of a coin increases and decreases?

Thanks in advance for your info!

If you took economics class it's basically that. Demand and supply is what sets the price and also some factors such as reputation, etc. If you're familiar with stock exchange or forex those are the same in btc. As more and more people are aware of it the higher the chances are that more investors will try btc. And because not all people are willing to sell their shares which adds up to the scarcity, the price will surge as the demands are higher and the supply is lower.

[Garld1936]

it is simple law supply and Demand + trust rule that make bitcoin price take it value

[tyuner4]

The buyer and seller fix the price of Bitcoin. When there are good news of Bitcoin, buyers are willing to pay more to buy Bitcoin. On the other hand, sellers are willing to sell Bitcoin at a cheaper price.

The supply and demand law applied here.

[JTPhotography]

Thanks all! I do get the basics of supply and demand and how it applies.

Let’s say, for example, that one year from now, 10x more people own bitcoin. That would result in a huge increase in value?

[mostkey]

One thing confuses me. Who and what actually sets the current price? I understand how things like China taking a negative stand on bitcoin can drive the price down, but don’t understand the very basics of  how the price actually moves. Is it a function of how many people own it at any given time, so as people buy and sell,  the price of a coin increases and decreases?

- Demand of bitcoin sets its price.
- Price moves just like price of other trading assets like gold/silver/oil moves but bitcoin is more volatile because it doesn't have very high marketcap like other assets till now.
- Yes when there will be more people to cashout than price can decrease and if there will be more new people who want to get into bitcoin than it can pump the price hard.

and all of this can move significantly due to the limited amount of bitcoin supplies. when all bitcoin succeeded in mine. bitcoin prices will be adjusted and will be reflected by the number of satoshi, even one satoshi will be very valuable. perhaps in the next 10-20 years

[coinsontheroad]

Thanks all! I do get the basics of supply and demand and how it applies.

Let’s say, for example, that one year from now, 10x more people own bitcoin. That would result in a huge increase in value?

Yes it would. As mass adoption grows so will price. This is also a result of supply and demand and is why so many of us are hoping that certain rumors will come true like Amazon accepting bitcoin.

[JTPhotography]

Makes sense. Also would seem to explain the rapid rise, as the price rises, more people want in, causing more rise. Exponential I think they call it . 

[fiulpro]

No question is ever stupid.. Everyone is a beginner at one , I will state some factors that will help you identify the causes:-
1. The demand and supply rule.
   Take for example you had 2 apples and 100 buyers and what would you do? You will simply sell it to the one who gives more money..just like in bitcoins when there are many people who owns bitcoins and this increases the demand pushing the market value up.. because their supply is more or so limited in a period of time.

2. Government support
  When any government supports it it simply becomes acceptable by major part of the public thus its a very essential factor.
Like in China when they banned there were many people who owned bitcoins..the ban of ICO'S and bitcoin exchange led to.. a major effect that led....to a major loss on the market but thankfully it all recovered.

3.There are now many major companies investing In it.. you might have heard about the wall street and stuff.. thuswhen they lauched their idea about the bitcoin future.. people started investing more and more in it thus elevating the demand and supply rule.

4.hardforks also increases the value of bitcoins since during hard fork you get free money literally.thus people tend to stock up before it even begins

There are many more factors you should do a little research.

[Mi5h0]

Thanks all! I do get the basics of supply and demand and how it applies.

Let’s say, for example, that one year from now, 10x more people own bitcoin. That would result in a huge increase in value?

The answer is rather simple and it lies in basic economics:scarcity, utility, supply and demand. The combination of two elements: scarcity and utility, creates value by which price is determined based on the market’s supply and demand. Bitcoins supply is limited. There are currently just over 16.6 million Bitcoin in circulation and the maximum is capped at 21 million. This set cap is well known, making its scarcity transparent. Bitcoin also has undeniable utility even when compared to other, more recent crypto currencies. There is no other digital currency that is more widely used and integrated at this moment.
However, Bitcoin's value can not be predicted. There are a lot of factors that influence the price. One thing is certain, Bitcoin's value will increase as long as demand for it increases. So it does not matter how many people will have Bitcoin in the future, but how many people will want it.
 

[Theb]

There are similar posts like what your thread has, and one example is this. Before you ask questions here in Bitcointalk, try to find the answer first here in the forum as your question has been answered many times before. Also if you really want to learn the best thing you can do is read topics that are available and if there is still something unclear to you then you can ask a question.

[JTPhotography]

There are similar posts like what your thread has, and one example is this. Before you ask questions here in Bitcointalk, try to find the answer first here in the forum as your question has been answered many times before. Also if you really want to learn the best thing you can do is read topics that are available and if there is still something unclear to you then you can ask a question.

If my post offended you, don’t read it, and by all means don’t waste your time replying.

[dunfida]

I am new to Bitcoin but I’ve been doing a bunch of research and learning. VERY interesting stuff! I invested a small amount a few months ago and I’ve seen my investment triple. I’m cautious but I’m all in and plan to slowly add to my wallet.

One thing confuses me. Who and what actually sets the current price? I understand how things like China taking a negative stand on bitcoin can drive the price down, but don’t understand the very basics of  how the price actually moves. Is it a function of how many people own it at any given time, so as people buy and sell,  the price of a coin increases and decreases?

Thanks in advance for your info!

If you did able to have an Economics subject in the school you would definitely answer this stuff without any hesitations and confusion on ones self. Us bitcoin users are the ones who dictates the price and it is indeed buying and selling can decrease and increase the price. Just like a tug of war. If theres a demand then each bitcoin would be valuable even more.Seeing that entire supply is just 21 Million and currently 16m coins is circulating which means it is really just limited if people would tend to adopt or buy more then price increase do happen.

[penig]

Thanks all! I do get the basics of supply and demand and how it applies.

Let’s say, for example, that one year from now, 10x more people own bitcoin. That would result in a huge increase in value?

Yes it would. As mass adoption grows so will price. This is also a result of supply and demand and is why so many of us are hoping that certain rumors will come true like Amazon accepting bitcoin.

That's not necessarily the positive to demand many believe.  If people are using bitcoin that means they are selling, as Amazon are unlikely to hold the bitcoin and payment processors (or Amazon themselves) will be immediately selling on the exchanges to $ etc.

[JanpriX]

This information that I'm going to say here is just my own understanding so it may be vague for you but I'll throw it anyway. This is just a simple supply and demand. As you have seen in the past months, demand for BTC (which has a limited supply) increased due to positive news popping out around the world. People buy crazy amounts of BTC and people stated selling at a premium because of this. Due to this cycle of people buying and someone selling it at premium, price of BTC skyrocketed. This will still continue in the future so what you are doing right now is the correct one. Accumulate more.

[Javathon]

The demand controls the price. The bitcoin is decentralized and it is a reason why it has no limits and as a result, it is very volatile, the price can go up or down in a very unpredictable manner. The hype of bitcoin is still growing as well as the demand on bitcoin that's why the price continues to surge. And the thing about china is related to the law of demand and supply, many people did panic selling and the demand goes down, the supply increases, then the price also went down at that time.

[aardvark15]

I am new to Bitcoin but I’ve been doing a bunch of research and learning. VERY interesting stuff! I invested a small amount a few months ago and I’ve seen my investment triple. I’m cautious but I’m all in and plan to slowly add to my wallet.

One thing confuses me. Who and what actually sets the current price? I understand how things like China taking a negative stand on bitcoin can drive the price down, but don’t understand the very basics of  how the price actually moves. Is it a function of how many people own it at any given time, so as people buy and sell,  the price of a coin increases and decreases?

Thanks in advance for your info!

The price is completely based on supply and demand. Think of it like the stock market. No one sets the price of stocks. The price rises as buyers keep buying and the sell orders get filled, the next sell orders are at a higher price and so on, so the price keeps rising. Essentially if there are more buyers than sellers, the price starts going up; and if there are more sellers than buyers, the price starts going down. It’s really based on the free market.