Key Predictors for Driving Bitcoin Price in 2021

(Credit: Pexels) Key Predictors for Driving Bitcoin Price in 2021
December 9
10:35 PM 2020

If you are considering investing in Bitcoin, you are probably wondering what to expect in 2021. There are several factors that will impact the price of Bitcoin in 2021, such as supply and demand, the impact of the pandemic, and political factors. Here's what you need to know about what's going to affect the value of Bitcoin next year:

1. The Laws Of Supply And Demand Will Determine The Value Of Bitcoin

Due to the pandemic, the economic times are uncertain. Therefore, more people are likely to invest in Bitcoin nowadays. As a result of the increased demand, the price of the cryptocurrency may rise. This could potentially create good conditions for investors. However, the amount of supply is difficult to predict. This depends on the amount of Bitcoin mining that takes place and whether or not halving occurs. 

Furthermore, the economy may recover swiftly after the vaccine release. This could result in rising Bitcoin prices and a struggling economy early in 2021 that's followed by a robust economy and reduced demand for Bitcoin later in the year. 

2. The Pandemic Will Continue To Have A Strong Economic Impact

The virus is unpredictable by nature, which means that it's difficult to predict the precise impact that the pandemic will have on the economy in 2021. However, it's likely that significant economic impacts will persist into next year. In fact, there will likely be some effects of the pandemic until 2022. 

However, it's likely that economic recovery will increase throughout 2021 and into 2022, and this may result in a decreased interest in alternative currencies like Bitcoin. Though, potential Bitcoin investors may also have more money to invest, which could increase the value of this cryptocurrency. 

3. There Are Political Factors To Consider

Due to the change of executive government, there is likely to be an impact on the economy and political sphere. This may increase interest in Bitcoin, as some may feel uncertain of the economic times. However, this impact is largely uncertain at this time. Furthermore, there is a possibility that there will be increased regulation of the cryptocurrency in some areas. 

While Bitcoin is largely unregulated, this is changing in some regions. Regulation of Bitcoin to lead to a reduction in its value. Some countries have already begun to place regulations on cryptocurrency and transactions that involve it. Though, the anonymous nature of Bitcoin and other cryptocurrencies makes them difficult to regulate. Therefore, the impact of government regulations may continue to be minimal. 

With that said, other countries are de-regulating cryptocurrency which has had a dramatic impact on Bitcoin prices in India, Africa and other developing markets. Governments are starting to understand the positive economic impact of cryptocurrency for their citizens. 

4. It's Important To Consider All Factors

We can expect that a wide range of factors will impact the price of Bitcoin in 2021, and this is always the case. Therefore, it's important to make sure that you remain informed about any changes in the world of cryptocurrency, which will reduce the chance that you'll be caught off guard by price fluctuations. Furthermore, there are software programs that can be used to anticipate potential future fluctuations in the value of cryptocurrencies like Bitcoin. Also, the average price of Bitcoin will vary somewhat from one platform to another. 

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