In 2017, Bitcoin captivated investors who were eager to profit from its increasing popularity. The value of Bitcoin started at $963.38 in January. By the end of the year, it reached $13,850.40, an astounding 1,338% increase. At its peak, the value reached $19,870.62. These encouraging trends led to widespread media coverage. Meanwhile, thousands of new cryptocurrencies popped up throughout 2017 as people jumped at the chance to capitalize on Bitcoin’s success.

The value of cryptocurrencies like Bitcoin show a pattern of considerable variation, rising and falling at the whim of supply and demand. The first Bitcoin was mined on January 3, 2009. By the start of 2018, the number of Bitcoin in circulation rose to 16.8 million. The maximum number of Bitcoins is set at 21 million. As the number of Bitcoins move closer to this ceiling, they become increasingly difficult to create. Yet, more and more investors want in on the action. This pumps up the value of Bitcoin. Another factor to consider is the cost of Bitcoin-mining itself. Mining operations require powerful computers. Therefore, the largest mining operations tend to be located in states that have low electricity costs. This affects the supply and demand for specific geographic regions.

Cryptocurrency has also drawn attention from major financial institutions, such as the Chicago Board Options Exchange and Fidelity, who have both jumped into the cryptocurrency game in recent months. This gives investors the impression that cryptocurrency is a feasible cash alternative, which in turn hikes up the demand. There is such confidence in the future of cryptocurrency, that investors have started hoarding them. This will affect supply in the future. The clear, long-term trend is that supply will decrease and demand will increase.

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