The Banking Executive Magazine - March 2024 Issue

INTRODUCTION Bitcoin has experienced a remark- able surge over the last year, with its price climbing steadily through 2023 before surging in late January 2024 and throughout February 2024. Bit- coin was recently trading at around $72,572 mark in March 2024, up 71.35% for the year-to-date and 199% in the last 12 months. This sig- nificant rise in Bitcoin's value has captured the attention of investors and financial experts once again, sparking discussions about the po- tential implications for the cryptocur- rency market in the coming years. Moreover, analysts predicts that Bit- coin price could potentially surge to $280,000 within the next three years, driven by the anticipated Bit- coin Exchange-Traded Fund ETF in- flows. This article examines how Bitcoin price is determined and overviews Bitcoin asset protocol BRC-20, Bit- coin halving, Bitcoin mining, and Bitcoin ETF. The article also presents an analysis of the impact of Bitcoin price rise on the outcome of United States (US) election in 2024. HOW BITCOIN PRICE IS DETERMINED The value of Bitcoin (BTC), unlike traditional fiat currencies such as the Euro or the United States US Dollar, is not determined by a centralized authority like a central bank. Instead, Bitcoin’s price is determined based on supply and demand. Bitcoin has a supply cap where no more than 21 million BTC will ever exist. Bitcoin’s price increases when demand ex- ceeds supply and decreases when demand falls. Other factors such as the cost of producing Bitcoin through mining, regulations, news, and com- petition from other cryptocurrencies can influence the supply and de- mand and thus, influence the Bit- coin’s price. The price volatility of Bitcoin has left many skeptics questioning the math- ematical and economic basis of price movements while searching for a generalized justification for its valu- ation. Since Bitcoin is decentralized, it doesn’t follow the monetary policy of governments, and Bitcoin is not backed by any underlying asset or government. The price of Bitcoin is determined by supply and demand. Like fiat cur- rency, when the demand for Bitcoin the BANKING EXECUTIVE 8 ISSUE 183 MARCH 2024 WHAT AFFECT BITCOIN PRICE AND HOW IT IS SHAPING US ELECTIONS? BY DR. SOHA MAAD