Table of Contents
Bitcoin’s Value: Understanding the Key Factors That Drive Bitcoin’s Price

Bitcoin’s Value: Understanding the Key Factors That Drive Bitcoin’s Price

For those wondering why Bitcoin is so valued by some, here are the factors that determine the worth people ascribe to it.

Buy BTC in App
Why Is Bitcoin Valuable

Key Takeaways

  • Bitcoin (BTC) has a limited supply of 21 million coins, creating scarcity in what some describe as akin to precious metals.
  • Demand and market sentiment significantly impact Bitcoin’s value; media coverage, regulatory changes, and global economic conditions can lead to price fluctuations due to increased buying or selling pressure.
  • Bitcoin’s usefulness grows as it becomes a more globally accepted medium of exchange for goods and services.
  • Bitcoin is also considered by some as a store of value, acting as a hedge against inflation and economic instability due to its decentralised nature and limited supply, making it resistant to interference and manipulation.
  • In addition, competition from other cryptocurrencies can influence Bitcoin’s price, emphasising the need for thorough research before buying this digital asset.

Why Is Bitcoin Valuable?

Bitcoin (BTC) has become a significant player in the financial world, captivating the attention of investors, traders, and enthusiasts alike. As of April 2024, its market capitalisation stood at over US$1.2 trillion.

But why exactly is BTC valuable? In this article, we delve into the key factors that drive its worth, shedding light on why Bitcoin has gained such prominence and continues to be a topic of interest for many.

Check out’s new BTC to USD Converter.

What Determines the Value of Bitcoin?

Limited supply

One of the primary reasons behind Bitcoin‘s value lies in its limited supply. Unlike traditional currencies that can be endlessly printed by central banks, Bitcoin operates on a fixed supply schedule. The total number of BTC ever to be in existence is capped at 21 million. This scarcity creates a sense of value and exclusivity, similar to precious metals like gold. Insofar as the demand for Bitcoin increases over time, the limited supply acts as a catalyst, driving its price higher.

Check out’s new Bitcoin Halving Countdown.

Demand and market sentiment

Bitcoin’s value is heavily influenced by demand and market sentiment. As more people become aware of Bitcoin and its potential, the demand for the cryptocurrency surges. Factors like media coverage, regulatory developments, and global economic conditions can significantly impact market sentiment, leading to increased buying or selling pressure. It is important to note that Bitcoin’s value is highly volatile, as it can experience significant price fluctuations in short periods due to speculative trading and investor emotions.

Learn how to trade Bitcoin in this introduction.

Medium of exchange

Another factor that contributes to Bitcoin’s value is its use as a medium of exchange. Over the years, Bitcoin has gained acceptance as a digital asset that can be used to purchase goods and services from a growing number of merchants worldwide. As the utility and acceptance of Bitcoin as a payment method increase, so does its value.

Additionally, the speed and cost-effectiveness of Bitcoin transactions compared to traditional banking systems make it an attractive alternative for cross-border payments and remittances, further driving its worth. However, there are still challenges to overcome, including network congestion and scalability.

Store of value

Apart from being a medium of exchange, Bitcoin is often considered a store of value. Similar to gold or other precious assets, Bitcoin is seen as a hedge against inflation and economic instability. The decentralised nature of Bitcoin, coupled with its limited supply, make it resistant to interference and manipulation. This characteristic attracts individuals seeking to preserve their wealth and protect it from potential economic downturns. As more people view Bitcoin as a reliable store of value, its demand may increase, thereby driving its price higher.

Factors That Influence Bitcoin’s Price

Understanding the factors that influence BTC’s price is crucial for traders. While demand and supply dynamics play a significant role, several other factors can impact Bitcoin’s value. 

Technological advancements, regulatory developments, security concerns, and competition from alternative cryptocurrencies can influence BTC’s price. It is important to stay up to date about these factors to make informed decisions.

Will Bitcoin Hold Its Value?

No one can answer the question of whether Bitcoin will hold its value. The decision to buy this asset depends on individual perspective and goals. Bitcoin has been hailed by some as the future of money, while others remain sceptical. As with any asset, there are risks involved. 

The volatility of BTC’s price can lead to substantial gains or losses, making it less suitable for risk-averse traders. However, for those willing to take on the risks, Bitcoin can serve as a diversification tool in their portfolio. Its potential for high returns and ability to act as a hedge against traditional financial (TradFi) systems makes it an appealing asset for some.

Conclusion: Why Bitcoin Is Valuable

Understanding the key factors that drive why Bitcoin is valuable is crucial for anyone interested in the cryptocurrency market. The limited supply, demand, market sentiment, and its use as a medium of exchange and store of value all contribute to Bitcoin’s value.

While Bitcoin’s price can be influenced by various factors, it is important to conduct thorough research and exercise caution before committing to cryptocurrencies. While only time will tell how Bitcoin’s value will evolve, large TradFi institutions, including ARK Invest and Standard Chartered, predict the BTC price to hit US$120,000 sometime in 2024.

Due Diligence and Do Your Own Research

All examples listed in this article are for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, cybersecurity, or other advice. Nothing contained herein shall constitute a solicitation, recommendation, endorsement, or offer by to invest, buy, or sell any coins, tokens, or other crypto assets. Returns on the buying and selling of crypto assets may be subject to tax, including capital gains tax, in your jurisdiction. 

Past performance is not a guarantee or predictor of future performance. The value of crypto assets can increase or decrease, and you could lose all or a substantial amount of your purchase price. When assessing a crypto asset, it’s essential for you to do your research and due diligence to make the best possible judgement, as any purchases shall be your sole responsibility.

Table of Contents
Buy Bitcoin Now
Scan the QR code, download the App.
QR Code
More on Bitcoin

What Is Bitcoin Halving?

Bitcoin halving process with light slashing token with BTC image

What Is Bitcoin Halving?


What Is Bitcoin Worth?

Hand holding two gold blocks representing Bitcoin's value

What Is Bitcoin Worth?


What Is Bitcoin Trading?

Trading Bitcoin with two hands exchanging token with BTC icon

What Is Bitcoin Trading?

Ready to start your crypto journey?

Get your step-by-step guide to setting up an account with
By clicking the Get Started button you acknowledge having read the Privacy Notice of where we explain how we use and protect your personal data.
Phone screen with QR code to download app
Phone screen to download app

Frequently Asked Questions

The concept of intrinsic value, which is an objective measure of an asset’s financial worth, originated in securities markets but applies to Bitcoin and other cryptocurrencies, as well. To determine an asset's intrinsic value, one starts by analysing its past performance, target market, and growth potential, amongst other factors. Note that intrinsic value is always just an estimate, however, and traders disagree on the best way to calculate it.

In the context of trading Bitcoin options, intrinsic value is the difference between the ‘strike price’ of the option and the current market value of Bitcoin, which may be positive or negative. Bitcoin traders should never put more capital into the cryptocurrency than they can afford to lose.
Bitcoin scarcity refers to the limited supply of Bitcoin. It has a cap of 21 million, while cryptocurrencies like Ethereum theoretically have an infinite supply. Many Bitcoin holders compare this scarcity to precious metals like gold.

As of April 2024, Bitcoin had a circulating supply of 19.6 million coins, meaning that miners have released 19.6 million coins into the Bitcoin economy since its inception. That number doesn’t account for bitcoins out of circulation (i.e., in abandoned wallets or trapped because their owner lost their private key).
Bitcoin is a decentralised currency, so no central authority controls its price. The value of Bitcoin increases or decreases through supply and demand in the market, and the price of Bitcoin fluctuates because market forces are constantly in a discovery state. For example, powerful influencers can cause Bitcoin price swings in either direction, while world news and the broader economy may affect market sentiment and, thus, the price of Bitcoin.

Bitcoin may also gain value when its underlying blockchain technology gains new applications, significant adoptions, or new merchants. Bitcoin faces theoretical competition from altcoins, as well, though the entire crypto market historically follows Bitcoin pricing.

Learn more about the Bitcoin market on the Bitcoin Price page.

Other tokens people are watching

Assets with the biggest change in unique page views on over the past 24 hours.
CDC logo
Get started with crypto
Scan to Download
Get started with crypto
Scan to Download
Get started with crypto
Scan to Download

The purpose of this website is solely to display information regarding the products and services available on the App. It is not intended to offer access to any of such products and services. You may obtain access to such products and services on the App.

Please note that the availability of the products and services on the App is subject to jurisdictional limitations. may not offer certain products, features and/or services on the App in certain jurisdictions due to potential or actual regulatory restrictions.

AICPA SOC security logo
SGS ISO 27701 security logo
SGS ISO 27001 security logo
PCi DSS certified logo

Copyright © 2018 - 2024 All rights reserved.