Bitcoin price analysis

Where does Bitcoin derive its Euro value from?

The Bitcoin exchange rate is a product of intensive trading at different markets, where traders interact with one another to sell Bitcoin or buy Bitcoin. Did the coin's exchange rate increase today? Then demand outstripped supply and vice versa. It's actually straightforward. Unfortunately, predicting the exchange rate is quite a bit more challenging. We now know how the exchange rate functions, but where does Bitcoin derive its value from? Why do people want to invest in Bitcoin? If you're interested in how you can read bitcoin graphs, visit our designated how to read cryptocurrency charts page. 

Keep your eyes on the Bitcoin chart

The cryptocurrency market is always open. But how do figure out the right time to buy or sell your Bitcoin? What's exciting about Bitcoin (BTC) is that its continually being traded. You can keep track of the current Bitcoin price 24 hours per day, 365 days a year. Of course, we would not recommend you to follow the latest developments that intensively, but you will certainly never get bored on the crypto market.

How do proponents value Bitcoin?

Opponents mostly base their arguments on the assumption that Bitcoin does not carry any intrinsic value because it lacks functionality in the physical domain. This indeed appears to be a very solid argument against Bitcoin on first sight. But it is also quite easy to rebuke this argument. In principle, not a single object carries intrinsic value. Objects only possess a certain kind of value because of human appreciation. Indeed, beauty, just like value, is in the eye of the beholder. There are no immutable laws of nature determining that 1 kilo of gold should always be worth €5000. As soon as people stop showing interest in gold, its value will automatically move towards zero. ‘Intrinsic value’ does not exist; nothing carries value an sich. The concept of value exists because people tend to attribute certain value to objects. This also currently holds for Bitcoin. Now, we will present a couple of arguments that suggest that value does not necessarily have to be based in the physical domain.

The Political Aspect

The political aspect of Bitcoin is perhaps the most valuable aspect of this digital coin. Bitcoin is the digital embodiment of the democratisation of our money. It's effectively a form of electronic cash that allows people to make payments completely independent from governments or financial institutions. You can compare it with precious metals, fit in a scalable digital format. Bitcoin knows no borders. Within a few seconds, value can be transmitted from one continent to another. As such, it may be the purest form of money currently existing.

Network Effect

The success of a payment method is entirely dependent on the size of its user base. Bitcoin is undoubtedly unique in this regard. There are currently about 37 million Bitcoin wallets. 750,000 of these have been active in the past 24 hours. Only one year ago, this number sat at 25 million, which means that its user base is still rapidly expanding. The more people use Bitcoin, the more recognition the coin receives, and the more it gains in value. This increase in value attracts new investors, which in turn again reinforces the network effect.

Brand value

It may sound awkward to discuss ‘brand value’ here because Bitcoin is — strictly speaking — not a company. But for many of us, Bitcoin has become emblematic of the crypto revolution. It was the first coin to implement the concept of decentralised cryptocurrencies successfully. Bitcoin is the irst independent form of electronic money in human history. It has become part of our historical lexicon, and that in itself already provides the coin with enough status to resonate indefinitely. Bitcoin has become an integral part of internet culture. Many of us fondly remember how we received our very first Bitcoins. 

Bitcoin's value remains an interesting subject to discuss, and attributing final value to the coin remains slightly problematic. But that only makes the trading game more exhilarating, as you can never be sure that now is the right time to start buying Bitcoins. It's a decision only you can make. Do you still have any questions about buying or selling Bitcoin? Then you can always contact our live support.

What do opponents of Bitcoin argue?

Now we have arrived at a fascinating debate, which has also drawn the attention of economists and other experts over the past couple of years. We already assessed that opponents of Bitcoin like to argue that cryptocurrencies do not carry any intrinsic value. They say that the exchange rate only fluctuates because buyers expect to be able to sell the coin at a later stage against a higher price. This is also referred to as the ‘greater fool theory.’ As Bitcoin carries no intrinsic value, opponents argue that its price will eventually dwindle to zero. This is based on the presumption that Bitcoin only serves as a digital payment method and has no secondary functionality. 

Gold, for instance, has also been used as a currency in the past, but aside from that, it also had its secondary application in jewellery. Gold is tangible; it represents a particular value in the physical domain. The amount of money people are willing to pay for gold jewellery serves as a framework of reference for the value of the precious metal. The same cannot be said of Bitcoin. It only exists in the digital domain. Essentially, the coin amounts to nothing more than a registry entry in a database. Consider that Jack possesses 5 BTC. What if someone would eventually come up with a better alternative for Bitcoin? Would people still be interested in obtaining BTC? Aside from its functionality as a payment method, there is no secondary use for the coin. Hence, this theory suggests that Bitcoin's final value is bound to drop down to zero eventually.

The Price History of Bitcoin

Bitcoin has not yet been around long, but it has already seen a couple of substantial rate fluctuations. Media outlets are fascinated with the violent swings of the Bitcoin exchange rate, which is why the coin's current price often appears in the news. We have listed a couple of highlights for you here, to allow you to have a better look at the Bitcoin price history so far: These events suggest that the development of Bitcoin is still at a very early stage; sometimes the digital trading appears reminiscent of the Wild West.

October 2009 - the first BTC/USD exchange rate

The first BTC/USD exchange rate was published on October 5, 2009. Back then, you were able to buy 1310 BTC for merely a single dollar! The very first public sale of the coin took place at the New Liberty Standard stock exchange.

May 2010 - Laszlo Hanyecz buys two pizzas for 10,000 BTC

It is perhaps the most extreme example of buyer’s remorse of all times. Laszlo Hanyecz, an American programmer, was initially very content with his purchase, now nearly ten years ago. His purchase has probably become the most famous Bitcoin transaction in history. It is also fair to assume that no has ever before paid so much money for a pizza. If Hanyecz had exchanged his Bitcoin for dollars today, he would have received about 80 million dollars in return.

February 2011- Bitcoin reaches the $1-mark for the first time

Two years after its launch, and less than a year after the legendary pizza purchase, the first decentralised digital currency already crossed the $1-mark.

2011 - Forbes: “So, that’s the end of Bitcoin then.”

After Bitcoin had reached this milestone, its value surged to $30 throughout a couple of months. It also dropped back down to $2 not much later. It was at that time that Forbes argued that the coin lacked liquidity; it did not possess a proper store of value, and the extreme slide in stock value proved that the coin would never function as payment method. Because, indeed, who would accept a currency with such a volatile value? “Bitcoin has nothing going for it,” Forbes wrote.

2013 – Business Insider: “Game over, Bitcoin.”

In hindsight, the 2011 price spike and accompanying slide appear negligible compared to the bull run and crash that happened in 2013. The renowned magazine argued that the $270 price spike and subsequent crash to $70 meant the definitive end of the Bitcoin era. "The bubble has burst, and now all that's left is to watch its steady and inexorable decline. It will crash and disappear like Pets.com and Lehman Brothers, existing only in the memories of economists."

2015 - Jamie Dimon (CEO JPMorgan): “Bitcoin will not survive.”

"People are wasting their time with digital currencies like Bitcoin. I'll be surprised if it's even here in five years." Dimon made this remark following another significant crash of the mother of all cryptocurrencies.

2018 - Forbes: “Is Bitcoin going to zero?”

Finally, it is inevitable to discuss the 2017/2018 hype cycle, in which the Bitcoin rate surged to $20,000 before dropping back to $3200. Forbes again declared the unavoidable death of Bitcoin. Future generations would read about Bitcoin in finance textbooks and wonder what all the fuss was about.

But Bitcoin keeps defying such expectations, as it has again been making a comeback. We hope that the information on this page has been of value to you and that it has provided you with a bit of insight on Bitcoin price fluctuations and some of the most common arguments. You can use this information to make your own informed decision. Finally, always keep in mind that when considering investment, it is essential that you do your comprehensive research. For a start, also read all about the Ethereum price, Ripple price, Bitcoin Cash price and the Litecoin price. Do not fall into the trap of getting carried away by emotions.