Bitcoin price increases by 20%, two reasons why

In the past five days the value of the cryptocurrency rose with 100$. On May 26 a bitcoin was sold for a little over 450$, five days later the price is suddenly 550$. What is the reason of this recent price increase?



Chinese investors

The bitcoin is highly dependent on China. Approximately three quarters of the transactions of the digital currencies are processed by computers in China. Moreover, only two Chinese tradeplatforms, Huobi and OKCoin, cover over 90 percent of the worldwide trading in bitcoin. The latter indicates that Chinese investors seek refuge in the cryptocurrency, hoping to score a quick profit.



The main proof that the bitcoin is hot in China: on Chinese trade forums the price of the bitcoin is 7 percent higher than at foreign competitors who wield the dollarprice.



Lower rewards for miners

Another reason for the rise of the bitcoin price: the currency is about to be more scarce. At this moment there are over 15 million bitcoins in the circulation. By means of mining new bitcoins are rewarded, however with the rewards bisecting every four years, there is a limit to the amount of bitcoins that can be created: a little under 21 million.



The next bisection is due on July 10th. From that day on, miners are rewarded 12,5 bitcoins for decoding the cryptographic puzzle instead of 25. This means there are fewer bitcoins in circulation, which has pushed up prices.

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