bitcoin price misconceptions

SHARE
← Back to articles
SHARE

3 Biggest misconceptions of Bitcoin pricing

September 2, 2017 10:00 am Published by

Bitcoin is like a temperamental teen adolescent.

Up one moment and the life of the party.

Then down the next… and we’re all holding our breath walking on eggshells.

Feeling misunderstood, misinterpreted and unappreciated.

Ironically, so is Bitcoin.

Bitcoin is extremely volatile, and when it comes to trading bitcoin, people often misunderstand, misinterpret and miscalculate.

A common phrase floating around lately…

I own $500 worth of bitcoin

This statement is technically flawed and can only be true at one point in time.

And leads to the top 3 biggest misconceptions of bitcoin pricing:

  1. Bitcoin price is not prone to fluctuations
  2. Bitcoin value is set to fiat currency
  3. Bitcoin value should always be valued to USD/GBP/EUR

Let’s debunk:

The economic principles of supply and demand apply to apply bitcoin, as such, the market value changes.

In January, Bitcoin was $1212

June 23, Bitcoin was $3409

July 15, $3000

August 20, $4600

August 29, $4200

At the time of writing: $4419.92

[edited] As at November 29, $10,000, and on December 12, $17,366.

The graph below illustrates the price up until October.

bitcoin price 2017

Buying bitcoin

If you bought $500 of bitcoin on June 23, you have 0.1 of a bitcoin. This doesn’t mean you own $500 of bitcoin. It actually means you own 0.1 bitcoin.

On June 29, the value of your 0.1 bitcoin would be $257.

Come August 10, the value of your bitcoin …. $336.

That’s perceived value and it is always changing. Check today’s price on coinmarketcap.

Of course, that doesn’t matter until you actually sell it.

Transferring bitcoin

Same rules apply. You own 0.1 bitcoin. When making a transfer you’re transferring 0.1 bitcoin, not $250 of bitcoin. The value changes, depending on the day you’re looking at it.

Again, it may have been $250 now, but $375 tonight, or $1900 tomorrow etc.

How Bitcoin price fluctuations may affect you, and your Wirex transaction

Like you, Wirex too is trying to deal with the temperament of Bitcoin’s ever-changing price.

To calculate our rates, we have a liquidity pool of providers (W-Pay), who compete for the best exchange rate at the time of your transaction. We’re focused on expanding this network of providers to ensure you get the lowest and most competitive exchange rate, always.

Learn more about W-Pay

Zero blockchain fees between Wirex Community

Furthermore, if you have been following, you may have heard we recently upgraded our platform (in preparation for Segwit), to eliminate blockchain fees for internal transfers between Wirex customers. That’s right, there is no blockchain fee when transferring to another Wirex account.As a Wirex

As a Wirex customer, you’re getting the best rate at the time of your transaction, guaranteed. AND you won’t get any blockchain fees when transferring within the Wirex community.

There’s still a long way before Bitcoin matures… until then we’re going to have to learn to make her volatility work for us.

If you’re not convinced, or just want to keep reading, check out our blog ‘Wirex stole my money’.

Notable Replies

  • Dan

    It is clear over time, month by month that the value of BitCoin is going up, do you think this trend will continue for the next few years?

  • raphael.shalaby

    If you judge by the last 8 years; then yes.

  • raphael.shalaby

    This is an old chart; looking at every Bitcoin price drop of over 25% and charting how long it took to recover.

  • raphael.shalaby

    What is everyone thinking of doing?

  • Ripplecopter

    The best you can do is to HODL ! :sunglasses:

  • raphael.shalaby

    #hodlgang

  • Ripplecopter

    LOL, that video is so hilarious ! :rofl:
    for sure I’m going to adopt the #hodlgang hashtag !

  • Tony

    This is all and well, but when people start to realize massively that they can’t transact on the Bitcoin network (stuck transactions, huge fees) any more, they’re gonna panic sell all the way down!

    And I’m not talking about ordinary people only. I had a talk recently with some miners who have wallets with numerous transactions (miner gains). To spend all those inputs, it will cost them tens of thousands of $$$ in transaction fees!! In some cases, they’ll need more bitcoins for transaction fees than the contents of the actual wallet itself = Unmovable funds!

    If Bitcoin fails to be what it was designed for (a peer-to-peer electronic cash system), then it will only be a richman’s toy, for the 1% of the people who don’t care spending thousands of $$$ for moving their millions or billions.

    The question to ask here is: If only 1% of people want to use Bitcoin, will it still cost $13000 ?

  • raphael.shalaby

    This is a good point; but I still think that even with the ridiculous fees Bitcoin can still remain a store of value. And it will still be cheaper and easier to move than Gold for example.

Is Bitcoin going to rise again?

There’s no question – Bitcoin’s been on an epic rollercoaster ride of late with the latest market figures valuing it at a mere $7,417 compared to the $19,343 highs of December 2017. But it’s not the only cryptocurrency that’s suffered, with Ethereum and Ripple both experiencing similar drops – so is it the end for the newest… View Article

Dear parents, here’s what you need to know about Bitcoin

If your kids have been through their teens (or are going through them now), you’re probably used to unpredictable behavior. Sudden mood swings, confidence highs and lows, a rebellious nature. Should that sound familiar, you already understand the nature of Bitcoin. Bitcoin acts a bit like a teenager. Volatile and fickle, Bitcoin has been through… View Article

What is the true value of cryptocurrency?

You can’t see me, or touch me but I can be mined. What am I? Answer – a cryptocurrency (of course). Money that you can’t hold, or really see and only truly exists in cyberspace – a case of the emperor’s new clothes perhaps? After all, surely something only exists because it’s tangible, right? So…if… View Article

A beginner’s look at Ethereum: 7 notable facts

For many people, Ethereum is the logical next step after getting the hang of Bitcoin. A couple of months ago, we covered the basics of Ethereum. Today we’re bringing you seven extra things you should know about the original altcoin. Ethereum is a platform for the cryptocurrency Ether Ethereum is a little more complicated than most altcoins. While Ethereum… View Article