Bitcoin has one of the highest price variations when compared with other financial assets traded on the forex markets. In the past year, the price of bitcoin has been more stable as compared with the price of oil from the world’s major oil producing nations.
The price of bitcoin is determined primarily by the activities of the bitcoin community, i.e. the demand and supply of bitcoin. Bitcoin has one of the highest fluctuations as compared to fiat currencies, but in the past year, observation has established that the volatile price of bitcoin has not been varying much compared to the price of petroleum.
Major events, like Brexit and the election of Donald Trump, caused a steady rise in the price of bitcoin. It’s observed that this increment is being maintained with the changes in prices only occurring by a small margin compared to that of the previous years.
“Bitcoin has reached its maturity stage, characterized by more users by both people and general acceptance by governments of many nations. Economic downturn in countries like Venezuela made people see bitcoin as a platform where their wealth can be safely stored.”
As we compare the changes in the price of bitcoin and that of oil, we examine the factors that led to the many variations in the price of oil. Coinidol.com spoke to Tom Kloza, chief oil analyst at the Oil Price Information Service. He stated:
“Much [of the] price fluctuation that has hit the oil market is caused by an increase in the supply of oil in the market, causing an initial drop in the price of oil worldwide. Activities of the United states military, one of the world’s largest single consumer of oil, also affects these variations.”
Stable prices and economic and political crises in many nations worldwide is an indication that bitcoin is destined for greatness and general usage by the masses. Coinidol.com spoke to
Eric Larcheveque, CEO at
Ledger, a french based Bitcoin hardware wallet. He commented:
“I call these improvements. Price fluctuation is the biggest threat for an investor who uses bitcoin as a medium of exchange. This would mean more bitcoin transactions are going to be carried using bitcoin and people will have more confidence storing their money in bitcoins.”