What affects the Bitcoin price?

Supply: fixed and predictable

Bitcoin has a maximum supply of 21 million coins. New coins are created as rewards for miners, and that reward is cut in half roughly every four years in an event called the halving. Because supply is fixed and its schedule is known in advance, most price changes come from changes in demand.

Demand: who is buying and why

Demand comes from many groups, each reacting to different news:

• Institutional investors, including through spot Bitcoin ETFs, whose daily inflows and outflows are closely watched.
• Retail investors, often influenced by price momentum and media attention.
• Companies and funds that hold Bitcoin on their balance sheets.
• People in countries with high inflation or capital controls who use Bitcoin as an alternative store of value.

The wider economy

Bitcoin increasingly trades alongside other risk assets. When interest rates are expected to fall and money is easy to borrow, investors tend to take more risk, which has historically supported Bitcoin. When rates rise or markets get nervous, Bitcoin often falls with stocks. A stronger US dollar can also weigh on its price.

Regulation and big events

Approvals such as ETFs, crackdowns on exchanges, tax changes and large hacks can all move the price quickly. Clear, favourable rules tend to bring in new buyers; bans or enforcement actions tend to push them away, at least in the short term.

Sentiment and leverage

Many traders use borrowed money (leverage). When prices move sharply, leveraged positions get closed automatically, which can push prices even further in the same direction. This is one reason Bitcoin can move several percent in hours.