The Price of Bitcoin
Let’s first answer a basic question: what determines the price of Bitcoin? The answer is simple – it is the intersection of supply and demand on exchanges.
Exchanges do not directly set the price of Bitcoin – the price is formed based on supply and demand. Let’s explain it with a simple example.
Imagine that there are only five people on an exchange.
After reading a great book about Bitcoin, I decide to invest in it. I want to buy Bitcoin worth 10,000 euros.
When I come to the exchange, the current price of Bitcoin is 100,000 euros per 1 BTC.
So my demand is 10,000 euros. At the same time, somewhere else in the world there are four people who are willing to sell their Bitcoin:
- John decides to sell 0.001 BTC at 100,000 EUR/BTC
- Maria sells 0.05 BTC at 101,000 EUR/BTC
- Peter offers 0.02 BTC at 102,000 EUR/BTC
- Eva sells 0.015 BTC at 103,000 EUR/BTC
Since I decided to buy a larger amount, I had to buy gradually from several sellers (no one was offering Bitcoin at 100,000 euros anymore). That means the last part of my purchase already happened at a higher price.
After my purchase, the new current price on the exchange is now 103,000 EUR/BTC.
Of course, there are not just five people trading on an exchange – in reality, thousands to millions of people from all over the world trade there. In addition, there are also so-called arbitrage traders.
These people (or more precisely, their programmed trading bots) make money by exploiting price differences between exchanges. Simply put, they constantly monitor all exchanges and try to buy cheaper Bitcoin on one exchange and sell it on another, where the price is higher.
It is precisely thanks to arbitrage traders that prices on different exchanges quickly equalize.
But not every price is the same. How much does a bottle of mineral water cost? Maybe 1 euro in a supermarket.
But how much would you be willing to pay for it if you were stranded in the middle of a desert, miles from the nearest oasis?
As I already mentioned, the price is determined by the intersection of demand and supply.
However, our world is huge and diverse. While in Europe we elect politicians in democratic elections, elsewhere a king or emperor rules. In some countries, a dictator holds absolute power.
Just as mineral water has a different price in the desert than in a European supermarket, the price of Bitcoin is also not the same everywhere.
Bitcoin is not traded at one “exact price” – it always depends on whether you find a seller willing to sell at the price you are willing to pay.
If you don’t find such a seller, you have to offer a higher price.
After Bitcoin was banned in Nigeria, its price there surged by tens of percent compared to the global price. Why? Because demand remained, but supply decreased – and when something becomes scarce, the price naturally rises.
What is a “high price” for Bitcoin compared to currencies suffering from inflation? Fiat currencies constantly lose their value.
I remember when people were talking about the “huge price” of Bitcoin at 8,000 USD. Today, that may seem like a bargain. Historically, Bitcoin has grown in four-year cycles. Of course, the fact that history has repeated so far does not mean it will always continue this way.
Why four-year cycles? The reason is simple: every four years the “inflation rate” of Bitcoin decreases.
Currently, in 2025, roughly 450 BTC are created every day. New bitcoins are earned by miners, who must pay for electricity, upgrade servers, maintain infrastructure – and therefore are often forced to sell part (or even all) of their mined bitcoins.
In addition to miners, there are always people who urgently need cash and therefore decide to sell BTC. On the other hand, there is constantly growing demand for Bitcoin as an asset. Before 2024, around 900 BTC were created per day. After 2028, it will be only 225 BTC per day.
The supply of Bitcoin is constantly decreasing, while demand is growing in the long term. Since price is the result of supply meeting demand, it logically tends to rise.
However, that doesn’t mean the price only moves in one direction. Bitcoin is influenced by global events, and if demand is temporarily lower than supply, the price naturally falls. But from a long-term perspective, we can see a continually rising trend – regardless of the current price.