Predicting the price of Bitcoin is one of the favorite activities of crypto enthusiasts and the main reason for curiosity for the rest. However, they are often inaccurate due to the fact that there are too many variables to consider that cannot be controlled. The best way to predict the future (as some will tell you) is to create it, well, that's not easy either. However, that doesn't stop people from at least trying to think about what the future will bring.
Bitcoin (BTC) is the best-performing asset of the decade, so if you had invested even a small amount in the asset in 2009, when it all started, you could have made millions. Just as intriguing and profitable would be Bitcoin's price prediction today, as the asset is currently trading at a relatively modest price compared to its potential. If you can accurately predict what the price of Bitcoin will be tomorrow, you can go long or short, or simply make money trading. So, can we predict the price of Bitcoin (BTC)? To a certain extent, yes, but certainly not with reasonable certainty and high certainty. However, there are factors that can be taken into account when trying to predict the price of Bitcoin in the future. Here's what you should beware of.
General financial condition, position and geopolitical situation
Bitcoin tends to grow on news of conflict or in times of turmoil and uncertainty. Similarly, its price seems to benefit from worsening economic conditions. This correlation exists because Bitcoin is an unconventional asset that previously provided both regular profits and significant profit growth for holders and investors. In addition, since it is de facto considered “digital gold”, people rush to it in order to preserve the value of their wealth in difficult times.
Local and international rules, or simply how the government treats it, can also influence the price of bitcoin. This may include restrictions or simplification of bitcoin mining, trading, accessibility of financial products, ease of access, acceptance status, and general cryptocurrency policy.
Blockchain analysis
Blockchain analysis can also give an idea of whether network activity is slowing or accelerating, which is useful in predicting future price action. Parameters such as the number of active addresses, transactions, new addresses created for a certain period of time, transferred cost, network congestion and fees paid to miners or validators, etc., can help you get an idea about the price action.
Internet searches
The increase in the number of Bitcoin-related searches in the most popular and used search engines, such as Google, etc., including price trackers and aggregator sites, such as Coinmarketcap, has been associated with a positive price movement. This is due to increased public interest in the crypto asset. Consequently, a decrease in searches signals a weak public interest, which usually does not bode well for the price of Bitcoin.
Technical Analysis
Information obtained from trading charts is one of the most widely used and useful ways of determining the price of Bitcoin in the future. This is noticeable on all crypto-related sites and literature. Technical analysis is based on historical price data, charts, and trends. In addition, for forecasting prices, support and resistance levels, moving averages, oscillators, trading volume and momentum indicators are taken into account.
Mood analysis
As the name implies, Sentiment Analysis relies on an analysis of people's sentiments regarding Bitcoin or any other crypto asset. It is used to determine people's attitudes to any product as a whole, to check whether it is positive, negative or neutral. The more positive the mood, the greater the likelihood that the price will move up. On the contrary, the more negative or indifferent the mood, the greater the likelihood of a price reduction.
Common Factors Affecting Bitcoin Price
Common factors affecting the price of Bitcoin may include any important events or improvements, such as the Lightning network, etc., Approximate hard forks that can weaken the currency’s market capital, even if slightly, difficulties with the hash rate will increase, which means that it becomes harder to mine Bitcoin if the Miners shut down their equipment due to electricity costs or due to local regulations, etc. In addition, the stock flow model is of paramount importance, which reflects the relationship between total supply and cost Emission rate (how fast a new delivery is issued).