BTC has gone through 10 years of history, and the price trend is amazing. It is particularly interesting to analyze the price formation mechanism behind this.
First of all, compared with stocks, foreign exchange, commodity futures and other familiar trading products. BTC's price formation mechanism is easier to analyze. This is mainly because BTC is a strictly designed financial product. The basic price of stocks is linked to the company's performance and operations. Foreign exchange is related to the economy and trade. Oil and commodities are related to demand and politics, and BTC is much simpler.
The simplicity of BTC is mainly reflected in a constant total amount (21 million), which is released in order (12.5 per ten minutes, halved every four years). Rule Determination (POW). This is the core of the decentralized currency belief (the purpose of Nakamoto to invent BTC!)
The so-called BTC price, we mainly refer to the exchange rate between the US dollar and the BTC. This price change and volatility mainly reflects the formation of people's perception and consensus on BTC.
The first indicator of consensus is the number of people. Bitcoin prices are generally positively related to the number of participants. From the initial circle of password punk, to the current level of tens of millions. Obviously this size has passed the safety threshold. The basic consensus of BTC has been confirmed. The risk of black swan (value zero) has been removed. And the tens of millions of people are only a fraction of the total population of 7.6 billion. So BTC's value space is still great!
The second indicator that affects consensus is demand. Around 2011, the demand for BTC in the dark network transaction gave BTC the first big push. Crossed the threshold of one hundred dollars. Next, BTC is mainly used as a tool for asset value-added/stored value. BTC's deflation features superimposed on the inflation characteristics of the French currency, will inevitably further push the BTC price up, the ceiling is basically no!
Decentralized beliefs are technology-driven, although BTC has been around for ten years. Basic technical stability has been verified. But the maturity of the technology is still being verified. Every time there is a problem with the exchange, the BTC has a fork, and the power game is a perturbation of cognition.
The cognitive game is also reflected in the connection and conflict with the existing centralized financial system. The BTC tests the regulatory rules of various national governments. This mainly affects the convenience of BTC transactions. Thereby affecting the inflow of funds and living water. For example, if the digital investment ETF can pass, it will definitely have a major impact on the BTC market.
BTC originated from the pursuit of decentralized currency, but because it is also the first killer blockchain application. BTC has also become the vane of the blockchain economic model. BTC has been a leader in digital assets for quite some time.
The 2017 currency bull market and the current bear market are the result of the ICO tide. In fact, it has little to do with the fundamentals of the BTC consensus.
Finally, as a trader, short-term trading prices are liquid-driven regardless of the underlying underlying value support. Excessive fluidity will promote foam, and fluidity will squeeze out the foam. This alternation of the bulls and bears drives the growth of the BTC consensus!
BTC is indeed digital gold. However, its value space has just been opened because its population base has just exceeded 10 million, and its market value is only 100 billion US dollars. I personally predict that there will be more than ten times (in comparison to the US dollar) room for growth in the future (within five years).
——Translation from Google
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