Bitcoin's price is determined by how much people want to buy it and how many are willing to sell it. This happens on websites where Bitcoin is traded, called cryptocurrency exchanges. These websites help people exchange their Bitcoin for other things, like regular money..
When lots of people want to buy Bitcoin (that's called demand) and not many people want to sell it, the price goes up. On the other hand, when not many people want to buy it and lots of people want to sell it, the price goes down.
Bitcoin is a kind of money, but it's different from the money you're used to. It's not made by a company, and no one can just make more whenever they want. There are rules that say there can only ever be 21 million Bitcoins. And new Bitcoins are made at a fixed rate, like 50 every 10 minutes, as a reward for people who help keep the Bitcoin network running smoothly.
This process keeps going until all 21 million Bitcoins are made, which will be around the year 2140. So, because the supply of Bitcoin is fixed, its price mostly depends on how much people want to buy and sell.
What Makes People Want Bitcoin?
Speculation: One big reason is people hoping that the price of Bitcoin will go up, so they can make money by selling it later.
More People, More Value: When more people start using Bitcoin, its value can go up a lot because it becomes more useful.
Hashrate: Computers that support the Bitcoin network make it strong. When lots of computers are working together, it's called "hashrate," and it can affect the price.
FUD: Sometimes people say bad things about Bitcoin, like it's not safe. This can make the price go down because people get scared.
Halving Period: The number of new Bitcoins made is planned ahead of time. This schedule changes every four years, and it can also affect the price.
Failing Fiat Currencies: Some countries have money that doesn't work well, so people might want to use Bitcoin instead.
Rules and Laws: If governments make rules that make it hard to use Bitcoin, the price can be affected.
Long-Term Holders: Some people keep their Bitcoin for a long time instead of selling it right away. This can also influence the price.
So, the price of Bitcoin depends on how much people want to buy and sell it. But other things like how many new Bitcoins are made and what people think about it can also change the price.