BTC/USD Technical Analysis
About the BTC/USD (Bitcoin/US Dollar)
BTC/USD is the most frequently traded currency cryptocurrency pair. The term BTC/USD depicts the value of Bitcoin against the US Dollar. Bitcoin is created by computers performing highly complex mathematical computations and thereby converting electricity into long strings of code that have monetary value. This computing is done in a distributed network and is called bitcoin mining.
The cryptocurrency pair indicates how many US dollars (the quote currency) are needed to purchase one Bitcoin (the base currency). For example, if the pair is trading at $3,500, it means that it takes $3,500 US dollars to buy 1 Bitcoin.
Breaking Down âBTC/USDâ
In January 2009, the financial world changed forever when the âgenesis blockâ of Bitcoin was mined by an anonymous person (or persons) using the pseudonym Satoshi Nakamoto. That was when the first decentralized cryptocurrency was created.
Bitcoins can be transferred between individualsâ cryptocurrency wallets or used to purchase goods or services online.
Every transaction done with Bitcoin is recorded in a massive data ledger called a blockchain.
This blockchain technology upon which the whole Bitcoin system is based combines the resources of all the machines that mine bitcoins and processes transactions on the network.
This decentralized collaborated effort ensures that no central authority can completely control Bitcoin.
Bitcoin Market Capitalization
Bitcoin (BTC, XBT) is the cryptocurrency with the largest market capitalization. At one stage, in 2017, its market cap was more than 37.5 billion dollars.
Bitcoinâs Limited Supply
There can be no more than 21 million Bitcoins. The reason for this supply limit is the decreasing-supply algorithm that is used in the mining process.
The Bitcoin mining process becomes exponentially slower as it progresses and it is estimated that the last Bitcoin will only be mined in May 2140.
Instruments Correlated to Bitcoin
Aspects Regarding the Bitcoin Systemâs Development
Although Bitcoin is the most established cryptocurrency, it is still very young compared to fiat currencies like the US dollar and the British Pound. Because of this, events related to its development and operation have the potential to move its price drastically.
Such events could include âhard forksâ which alter the internal structure of how Bitcoin operates. Bitcoin faces an evolving scaling issue which needs to be addressed, one way or another.
Increasing the Bitcoin block size capacity is one way to solve the serious blockchain congestion problem faced by the Bitcoin community at the moment. In order to accomplish this, a âhard forkâ is unavoidable though.
Global Financial Crisis
Something else that could affect the price of Bitcoin considerably, is a global financial crisis.
If confidence in major central banks and governments fail, there could be a flight to safety which could boost the appeal of alternative stores of value, of which Bitcoin could be an important one.
On 5 December 2013, the Peopleâs Bank of China stepped in and banned financial institutions on the Chinese mainland from dealing in Bitcoin.
This intervention by the Chinese government caused a massive selloff, and Bitcoin lost more than 50% of its value in a matter of days.
After this initial plunge, the Bitcoin price continued drifting lower for more than a year before it bottomed out.