Eyal Avramovich – 4 Factors Driving the Price of Bitcoin

Eyal Avramovich has over 20 years of experience as a serial entrepreneur building innovative FinTech and Blockchain businesses worldwide.

He earned a degree in electronics engineering and several patents, the most notable of which were the world’s thinnest scales, the world’s thinnest phone charger and the world’s first massage and relaxation robot. These were best sellers in certain chain stores, respectively the online store Amazon and the American shopping channel QVC.

Over the past two decades, he has successfully introduced five inventions, including successfully selling the Gigabit Ethernet camera technology to a Japanese multinational company.

But perhaps Eyal’s greatest achievement is in the crypto space. He first discovered Bitcoin in 2016 and was overwhelmed by the solutions it offered in terms of independence, flexibility and technological possibilities. He discovered that Bitcoin – and its mining – merged all of his lifelong passions: technology, entrepreneurship and finance.

Eyal Avramovich is the founder of MineBest, an award-winning cryptocurrency mining business that he started in 2017, and co-creator of the Bitcoin Vault (BTCV) and Electric Cash (ELCASH) cryptocurrencies.

MineBest is a group of collaborative companies and local business partners that help businesses enter the mining industry without the technical know-how involved. By democratizing the space, Eyal found that more people could enjoy the long-term benefits of crypto mining.

MineBest operates several mining farms around the world and is constantly exploring new locations. They offer state-of-the-art facilities and infrastructure that are maintained by experts round the clock.

In addition to his work with MineBest, Eyal has co-created two cryptocurrencies, Bitcoin Vault (BTCV) and Electric Cash (ELCASH). Both coins have been praised for their cutting-edge security features.

Electric Cash is a proof of work SHA-256 based cryptocurrency. It provides fast and very cheap transactions and rewards all users who stake while allowing them to control the future of the project through voting.

Meanwhile, Bitcoin Vault is the world’s first cryptocurrency that allows users to cancel transactions after they are posted to the blockchain. This revolutionary approach is possible with a custom blockchain protocol that confirms payments within 144 blocks (or around 24 hours). This feature protects users from losing their money in the event of common key thefts, user errors or mistakes, and errors.

After starting 2022 at $47,299.69, the price of Bitcoin recently fell to around $20,000 as we approach the end of the third quarter. All this shows how volatile cryptocurrency can be.

There are many factors that affect the price of Bitcoin. These include media hype, wider audience adoption, political uncertainty and risk, government and regulatory action, and the internal governance of Bitcoin itself.

We recently had the opportunity to catch up with Eyal Avramovich and hear his perspective on the factors driving the price of Bitcoin and a glimpse into the future of cryptocurrency from one of the industry’s leading entrepreneurs.

1) Media hype

Economists have long observed that psychological factors can strongly influence investor decisions. Investors often make decisions based on the behavior of other market participants and their own intuitions rather than technical analysis. Fear of Missing Out (FOMO) is a powerful motivator when prices rise, and loss aversion plays a strong role when prices fall – economists have observed that we tend to act more irrationally when trying to avoid investment losses than we do to pursue them investment gains.

Analysis of the price of Bitcoin shows that positive media coverage is one of the main factors driving the price.

Positive media coverage of new technologies causes a well-known hype cycle – a peak of hype is followed by a “trough of disillusionment.”

This was most evident in the early days of Bitcoin when the mainstream press began reporting on the new currency, causing a series of brief price spikes and collapses. As media coverage increases and other factors are brought in, the effect of the media alone tends to be balanced by other factors.

In the stock market, we see a similar phenomenon during an initial public offering (IPO), as investors “jump in” a lotand the value increases rapidly from the opening price.

2) Political risk

Political risk surrounding fiat currencies can also affect the price of Bitcoin as people use digital currencies to hedge against price movements in a particular currency, or they need to quickly move large amounts out of a country or currency.

The economic crisis in Greece in 2015 was followed by reports of increased purchases of Bitcoin by Greek citizens who wanted to protect their wealth.

But nervousness surrounding the national referendum on Britain leaving the European Union (Brexit) led to an increase in the price of Bitcoin along with a decline in the value of the British pound.

In the first 18 months since COVID-19 was declared a pandemic, the price of Bitcoin rose by around 525 percent.

After Biden’s election, economic uncertainty caused another surge in Bitcoin prices.

3) Regulatory measures

Global regulators struggle to respond to the rise of Bitcoin. Some jurisdictions have decided to ban the cryptocurrency completely, such as China, while others, such as El Salvador, have warmly embraced digital currency. Expanding the use of cryptocurrency will force regulators to decide soon, for example, how it will be treated by the tax system or whether and what regulation applies to its use.

These decisions will have a dramatic impact on the price of Bitcoin. When China decided to shut down several Bitcoin exchanges and ban initial coin offerings (a form of crowdfunding often paid for with cryptocurrencies), the decision caused the price of Bitcoin to plunge by 29% in 24 hours.

4) Bitcoin’s governance

Although Bitcoin is a decentralized currency, some decisions about how it will work or evolve must be made from time to time. These also have an impact on the price.

The software used to verify Bitcoin transactions is created by developers and operated by miners.

To change the software used to mine and authenticate transactions, developers need more than 50% of the global network of miners to accept a proposed change. Once they get that support, they can create a “fork”.

In August 2017, Bitcoin underwent a “hard fork.” A new cryptocurrency – Bitcoin Cash – was created and everyone who owned Bitcoin was given this new cryptocurrency. The Bitcoin Cash software can process 30 transactions per second, four times more than Bitcoin.

Even if the price rose quickly afterwards, a fork creates uncertainty, and uncertainty can cause price volatility.

Summary

These four factors have all had a significant impact on the price of Bitcoin during its short life. It is an ephemeral and experimental technology and is still under development.

In the longer term, Bitcoin is likely to gain acceptance among investors for many reasons. For example, Bitcoin is deflationary – because there is a limited supply in both the total number of Bitcoins that can ever be created, as well as the rate at which they can be created, and the purchasing power of Bitcoin is expected to increase over time.

This differs significantly from fiat currencies such as the US dollar. Inflation will significantly reduce the value of a dollar over time.

For investors, the volatility of Bitcoin can create an opportunistic trading environment (eg, many price movements provide opportunities to make money by buying or selling).

Bitcoin can also be a long-term investment due to the fact that it is unregulated in supply and has some advantages over some national currencies: it is global, untied to the supply of currencies from central banks, easily transferable across national borders and does not incur significant transactions and administration costs paid to banks, foreign exchange markets and financial traders.