Bitcoin, though the largest and most established cryptocurrency, still represents a relatively small portion of the global financial markets. As a result, even modest trading volumes can lead to significant price fluctuations. The relatively low liquidity in the Bitcoin market means that large buy or sell orders can drastically impact the price, causing it to rise or fall sharply within a short period.

Additionally, the lack of widespread adoption and the still-developing nature of the cryptocurrency market contribute to these liquidity issues. Unlike traditional assets, which benefit from deep, well-established markets, Bitcoin's trading volume is often concentrated on a small number of exchanges, making it more susceptible to price manipulation and market swings.

4. Technical Factors and Network Activity

Bitcoin's price movements are also influenced by technical factors, such as network activity and mining dynamics. For example, the "halving" event, which occurs approximately every four years and reduces the reward for mining Bitcoin, is a significant factor in Bitcoin’s price history. Historically, halving events have been followed by significant price increases, as they reduce the rate of new supply entering the market.

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