From 48,000 to 56,000, why did the price of Bitcoin fluctuate so much in just two weeks?

From 48,000 to 56,000, why did the price of Bitcoin fluctuate so much in just two weeks?

In 2021, Bitcoin became popular and became the hottest investment project at the beginning of the year.

As of March 11, the value of one bitcoin has reached $56,000, up more than 20% from the last adjustment low of $45,000, hitting a two-week high, and its market value has once again exceeded $1 trillion.

With a number of well-known companies such as Tesla investing in Bitcoin, in today's investment circle, it seems that we can't keep up with the heat of the times if we don't talk about Bitcoin. So today we will take a look at why Bitcoin is so valuable and why Bitcoin has a roller coaster ups and downs.

What is Bitcoin worth?

According to economics, the commodity value and use value of a commodity constitute the attributes of the commodity. From the perspective of Bitcoin, it does not have any use value in itself.

Bitcoin itself is a virtual currency based on blockchain technology. Although it covers many high-end and emerging technologies, Bitcoin itself has no use value. People buy Bitcoins for the transaction value of Bitcoin, that is, the profit difference brought by investing in Bitcoin.

The commodity value of Bitcoin can be said to have no value at all. Bitcoin was created in 2008 and is a virtual currency based on a variety of computer encryption operation chains.

In 2010, the first Bitcoin transaction was 10,000 Bitcoins exchanged for a $25 pizza coupon.

According to Marx's commodity value theory, the commodity value of Bitcoin is equal to the labor productivity of producing the commodity. In other words, the commodity value of Bitcoin is the cost value of mining.

From an economic perspective, the various properties of Bitcoin determine that the value of this commodity (defined as a commodity, not a currency) is not high, so why has the value of Bitcoin continued to rise over the past decade, reaching $56,000? This involves the issue of capital investment.

Bitcoin is a “vehicle”

Let me tell you a little story first.

A businessman went to a small mountain village, and there were monkeys all around the village. The businessman told the villagers that he would sell monkeys for 100 yuan each. The villagers didn't know whether it was true or not, so they caught a monkey and the businessman really gave them 100 yuan. So the villagers caught monkeys all over the mountain and soon bought 2,000 monkeys, but most of the monkeys on the mountain had been caught. The businessman offered another 200 yuan per monkey and caught all the monkeys on the mountain. So the businessman continued to raise the price to 500 yuan per monkey, but there were no more monkeys on the mountain.

At this time, the merchant went back to the city for something. The merchant's assistant told the villagers, "I will sell the monkeys to you for 300 yuan each, and you can sell them to the merchant for 500 yuan each." The villagers sold everything they had and bought all the monkeys.

The assistant left with the money, but the merchant never came back.

After reading this story, everyone will understand that this is a scam.

Yes, this is a scam. The so-called 100 yuan, 200 yuan, or 500 yuan for a monkey is not the value of the monkey itself. Monkeys live in mountain villages and do not have any value in themselves.

But after some manipulation by merchants, the value of the monkey rose to 100 yuan, 200 yuan, and even 500 yuan.

But this so-called value is illusory, and monkeys are just "carriers" manipulated by businessmen!

Bitcoin's price fluctuates - and some people don't want it to fall!

Now we have really entered the core!

Since Bitcoin itself has no value and is a vehicle for merchants (capital) to manipulate, why does its price fluctuate so much?

The problem here is actually very simple.

Just like stocks, what determines the rise and fall of stocks?

It’s all about buying and selling!

The total amount of stock is constant.

As more people buy, there are fewer and fewer stocks, and the stock price becomes higher and higher.

As more people sell, there are more and more stocks, and the stock price becomes lower and lower.

The total number of bitcoins is also relatively constant. Someone has increased the value of a bitcoin from being worthless to $1,000. He needs to cash out and sells the bitcoins. If more bitcoins are sold, more bitcoins will circulate in the market, and the price will fall.

Those who spent $1,000 to buy Bitcoin would certainly be unwilling to accept the fact that the price of the Bitcoin they just bought has dropped to $700, and would hype it up again, driving the price of Bitcoin to $5,000.

Over and over again, buying and selling transactions, and cashing out again and again have led to the roller coaster-like rise and fall of Bitcoin.

As the Bitcoin market gets bigger and bigger, more and more people don’t want it to collapse, which is why many individuals and companies are buying Bitcoin as mentioned earlier in the article.

They want to stimulate people through this kind of increase and sell for cash.

As for where the next cycle will be, it depends on the psychological expectations of the market makers and the purchasing power of retail investors!