Take a look at the news surrounding Bitcoin and it will soon become clear that people love to speculate about the price. Some think the token will fail and some think it will be worth millions in a few years. Either way, the token is an endless source of fascination thanks to its financial implications.
But how much of its prominence is due to external factors? The truth is that the machine pushing Bitcoin forward is powered by factors that have nothing to do with buying and selling. In this article, we break down some of them.
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Media Hype
Anyone involved in investing will tell you that the media has a major impact on the decisions made by people and the perception of specific assets. In Bitcoin’s case, media hype refers to the attention both it and other tokens receive. Every time the media reports on Bitcoin being the currency of the future or even as a fad, it drives curiosity about the token. Endless predictions about its current and future price mean that more people will buy into the token.
Then we have to consider the impact of other tokens’ performance. When a new meme coin gains organic attention, it is usually compared to Bitcoin. Your average crypto marketing strategy will try to draw attention to new projects by juxtaposing them with Bitcoin or other more established coins, and this has become standard industry practice. Even if it isn’t, the success of the industry as a whole tends to benefit Bitcoin given that it is the biggest crypto in the world.
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Social Media
Social media can make virtually anything relevant and Bitcoin has relied heavily on this over the years. Because it is not a ‘traditional’ currency, it needed a push from an organic community of supporters and social media made this possible. On sites like Twitter and Instagram, Bitcoin lovers have pushed the benefits of this token and brought in new investors thanks to their efforts. In the early days when institutional support was lacking, social media was all Bitcoin had to get the word out there, and even now, the community uses it for organizing and communication.
News about major market movements, new developments, and whatnot are spread first on social media and it is hard to imagine Bitcoin being as big as it is without its digital warriors. The rest of the crypto sector has followed in this lead, with many fighting to develop a loyal social media following before even hitting the market.
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Political Factors
Believe it or not, Bitcoin’s prominence is partially because of its connection to the global political scene. It might seem farfetched but keep in mind that Bitcoin was created in response to the 2008 financial crisis. As such, politics has always been a part of its makeup. In recent times, we’ve seen Bitcoin become legal tender in two different countries, which raised its public profile and solidified its use even outside of the hype. This year, the US elections saw more references to cryptocurrency than anyone before it. From Donald Trump releasing a line of Bitcoin sneakers to Kamala Harris promising to support the industry, the political elite are aligning themselves with the digital asset space.
This helped catapult Bitcoin not only to new price highs but also signalled to the public that it is here to stay beyond just a fad. So yes, political factors do indeed play a part in its market movements and legacy.
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FOMO and Use Cases
It might seem simple but a major external factor Bitcoin relies on is the combination of FOMO and use cases. Love it or hate it, Bitcoin is one of the most publicly visible assets on the planet and this means that many will want to get their hands on it to avoid being left out. Then there are the ways that the Bitcoin blockchain can be used outside of monetary gain. From mining NFTs to permanently storing information, it has much to offer. As these use cases and overall prominence grow, it will only become more sought after.
With any luck, it will continue to be one of the highest-performing assets in the world, bringing in returns for investors.
Conclusion
Behind the global phenomenon that is Bitcoin lies a complex and hardworking machine powered by many external factors. As we’ve highlighted in this article, everything from social media hype to the political scene around the world has impacted Bitcoin for better and worse.
Investors should be aware of these factors and how they manifest before putting their money into Bitcoin. This could mean buying and selling or even refraining from investing at certain times. But regardless of immediate investor choices, these factors seem on track to continue to impact Bitcoin for the foreseeable future, with some of them only becoming more prominent over time.
