Bitcoin is neither backed by a government nor is issued by a central bank, unlike investing in a traditional currency. As a result, the inflation rates, measurements of economic growth, and the monetary policy that typically influences the value of a currency do not apply specifically to Bitcoin. Conversely, the prices of bitcoin tend to get influenced primarily by the following factors:
Supply
An asset’s supply plays a very crucial role during the determination of its price. An asset available in plenty tends to have low prices compared to a scarce asset that has high prices. The supply of bitcoin is known to be dwindling since its very inception into the market. The protocol followed by the cryptocurrency permits the creation of only new bitcoins at a fixed rate designed to slow down over time.
An event of bitcoin occurring every four years corresponds to a bump in price as it means that the supply of cryptocurrency is reduced.
Demand
Bitcoin has attracted the attention of a plethora of retail investors while it is yet to discover a medium of exchange. The locus of the demand for bitcoin is known to shift based on geopolitical and economic considerations. All of this essentially indicated shrinkage in the supply of bitcoin that has been coupled with a surge in the demand that acts as a fuel for the prices of bitcoin.
Alternation periods of busts and booms have become an attribute of the ecosystem of cryptocurrency. Say, for instance, a run-up in bitcoin prices was succeeded by an extended winter in 2017.
The price of btc to inr is 1 bitcoin = 46,77,982.98 Indian Rupee in the present times.
Conclusion
Bitcoin is still considered a nascent class of assets even after its presence in society for more than a decade. This significantly means that its price is determined by complex factors that include competition, regulatory developments, and production costs.
The technological roots of cryptocurrency signify that other factors like forks on the blockchains or the level of difficulty of the algorithms play an important role in the price determination of bitcoin.