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Far from the steady second-wave bull run many in the crypto space were expecting following the Bitcoin halving in April, the cryptocurrency’s value trend has, in fact, been rather underwhelming. Over the course of June, Bitcoin’s price has dropped 12.52%. But despite this recent slump, it is indeed up by 45% compared to the same time last year. What’s more, Bitcoin has been on an impressive bull run since November 2023, climbing from $34,000 at the end of October to over $73,000 in March 2024. In the world of cryptocurrency, value fluctuations are difficult to predict and analyze, given the multiple factors that influence the market. But the overall sentiment remains positive, and experts advise that any short-term slumps are unlikely to affect Bitcoin’s general upward price trajectory.
In this article, we take a closer look at what factors determine Bitcoin’s value and price fluctuations, what is likely to have caused the most recent slump, and what the near future looks like for Bitcoin.
What factors determine Bitcoin’s value?
Bitcoin’s value is determined by an amalgamation of factors, including supply, demand, media and news, competition, the cost of production, and regulatory changes. With a maximum of 21 million bitcoins and a fixed, slowing rate of new coin creation, Bitcoin’s scarcity naturally drives up demand and price, much like a decreasing corn harvest would for international trade. This scarcity is compounded by increasing interest from retail and institutional investors, and regulatory changes such as the recent spot ETF approvals by the SEC, making it easier for traditional investors to get in on the Bitcoin action.
Competition from other cryptocurrencies, such as Ethereum, a leader in decentralized finance applications, as well as Tether, BNB, USDCoin, and Solana, can also have an effect on Bitcoin’s value, tending to influence market movements and reduce its market dominance further. With regard to media influence, news coverage can work both for and against Bitcoin’s price in an attempt to keep interested parties informed. Any changes to the previously mentioned factors are quickly picked up on and shared on both long-form and social media, adding to their impact, whether in a positive or negative sense.
What experts say about the recent Bitcoin slump
According to experts from Forbes, Bitcoin’s most recent decline began following the June FOMC meeting, where the Federal Reserve decided to hold the federal funds rate steady, dashing hopes for a rate cut in the first half of the year and unsettling some crypto investors. Lower interest rates typically lead to increased investments in speculative assets like cryptocurrency, boosting their value.
Since the FOMC meeting, outflows from crypto exchange-traded funds (ETFs) have reached $1.2 billion, and Bitcoin has fallen more than 6% in the past week. Experts are also closely watching the anticipated release of the May personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, which could also impact the market. Although this recent slump is not expected to drastically alter Bitcoin’s long-term trajectory, negative news from the PCE report could hinder its short-term performance.
Bitcoin’s 2024 trajectory
Despite this latest dip in value, Bitcoin experts still forecast a significant bull run in 2024. The popular cryptocurrency’s performance in 2024 will be determined by various factors, including institutional adoption, regulatory changes, macroeconomic trends, and the most recent halving event in April. The settlement of legal issues with Binance at the end of 2023 represented a green light for the crypto industry, helping to boost investor confidence after being sat in the shadows of a gloomy cloud since proceedings began.
The approval of multiple spot Bitcoin ETFs at the start of 2024 has also bolstered market confidence and increased demand, and innovations such as ordinals, BRC-20 tokens, and the growing adoption of the Lightning Network are also set to enhance Bitcoin’s utility and potentially increase its value. Last but not least, the rising hopes for interest rate cuts in the US market may also bolster Bitcoin’s appreciation after the Chairman of the US Federal Reserve announced in late June that they may have reached the peak of their rate hike cycle.
Overall, despite the recent Bitcoin slump, 2024 is shaping up to be a promising year for the largest cryptocurrency in the game, with experts forecasting potential highs of around $120,000 and lows of $35,000. For more information on cryptocurrency, crypto payments, and decentralized finance, visit www.forumpay.com/blog.
