What is driving up the exchange rate of bitcoin?

Bitcoin is a decentralized, digital currency that is traded across the globe. The actual Bitcoin Exchange rate fluctuates sometimes quite wildly from day to day and even from hour to hour. The interesting thing about Bitcoins is that the exchange rate not only fluctuates from day to day, but also from site to site. Due to the fact of there being multiple exchanges and therefore a variety of exchange rates at any given time, its prudent to check more than one exchange site in order to get a good feel on the actual value of your bitcoins.

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Some Bitcoin Exchange sites will do the work for you by automatically pulling in the exchange rate from different exchanges and then averaging them for you, however, I would suggest you take the time to get to know several different exchanges, as you might find one offering to buy bitcoins at a much higher value than a similar exchange site. Usually, you will find a favorite exchange site with a higher exchange rate and decide to stick with it. This is all good, but still, a good idea would be to continue to keep an eye on other exchange sites as its possible one site that might be trading at a high exchange rate one week might be trading at a lower comparative rate the next.

If you do a historical search of Bitcoin exchange rates, you'll find that over time, the exchange rate has tended to appreciate more the depreciate, though there have been some periods of rapid depreciation. In general, the longer you hold your bitcoins, the more they will grow in value. This is not always true, and lately, the bitcoin exchange rate has seen a bit of a drop, but consider if you bought bitcoins in the early part of 2013, the exchange rate was around 13.50(USD) by the end of 2013, the exchange rate was around 1200.00(USD). That's over 1500% appreciation in one year's time. Of course, that doesn't mean bitcoins will always appreciate at such drastic rates, but you can see the overall potential here.

If you are thinking about investing in bitcoins, now would be a great time to do so. The bitcoin exchange rate right now is fairly low, but most analysts agree that we will be seeing a very large appreciation in the near future, with more online merchants accepting bitcoins every day and general recognition of the intrinsic value of this digital currency. However, as with any currency exchange and stock exchange, nothing is guaranteed.

If you have the means, though, and can afford it, I would highly recommend investing today while the bitcoin exchange rate is trading at a fairly low rate. Like I say, it's not guaranteed, but it's very likely bitcoins will see another surge like it did in 2013. As more people become aware of bitcoins and more merchants (online and physical) are accepting it, it will naturally become more valuable. Just 1-5 bitcoins bought at today's bitcoin exchange rate could net a thousand percent (or more) profit in just one or two years.

If you arent ready to invest yet, at least keep a watch on what bitcoins are doing. If you see an appreciation curve for over a week period (ie., steadily increasing with no depreciation), then get on board, as the growth will likely continue for quite a while and when you see it start to depreciate, go ahead and offload some (or all) of your coins and reap your profit. Though, I would suggest you still hold on to 1 or 2 bitcoins (or 10 or 20) as a hedge, just in case they start going back up and, as I've said, keep a close watch on that bitcoin exchange rate, you never know what might happen in just one day with bitcoins and if you aren't watching you may miss your opportunity.