What Drives Bitcoin's Price? Its Inherent System or Human Manipulation

Abstract

Since the introduction of cryptocurrency and blockchain in 2009, the technology has proved revolutionary in simplifying transactions, providing new ways of security, and most notably as an investment. However, crypto’s significant advantage of substantial price growth comes with the risk of sudden price fluctuations and volatility. In this ever-changing, complicated market, cryptocurrencies’ nature of being in constant influence of both inherent, preset systems unique to each crypto (described as “economic rules”) and human investment decisions (described as “human manipulation”) burden the process of tracking price movements. Social media, for example, is a diverse information outlet for private investors seeking trends and new opportunities to generate wealth. In return, the inherent cryptosystem (such as the event of “halving” in Bitcoin) drives the price upwards due to the increasing scarcity against the demand. As shown above, even a single coin is affected by countless factors. Therefore, this paper aims to answer which influences Bitcoin's price more: human manipulation or economic rules, by analyzing social media influence, individual/commercial investing, and examining past case studies that had crucially moved the price of Bitcoin. Through this thorough analysis, we can offer insights into the balance between human manipulation and economic rules.