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For those of us seeking the appeal of a minimalist life on the water, the cost to build a houseboat will depend as much on how much elbow grease we’re willing to dedicate to the project as it does on the type of materials we decide to use for the job.

A houseboat is a self-propelled vessel with a cabin. There are many styles, giving people wide discretion on how they choose to build their own houseboat.

Let’s break down factors and average costs associated with building a houseboat.

Average Cost of Building a Houseboat

How much does it cost to build a houseboat? Just like the cost to build a house, it depends on size, materials, whether it’s a total DIY job, and more.

The cost of building a single-story 50-foot houseboat is at least $10,000 to $20,000, some sources say. To be clear, this estimate means doing all the work yourself or with the help of friends. A smaller, basic houseboat may cost less than that to build.

Labor costs for professionals like electricians or plumbers will increase your expenses substantially. So understand that you’ll be trading time and know-how for savings.

There are also houseboat kits and plans for sale. Charmingly, some are advertised as DIY pontoon tiny houses.

By contrast, you can choose to purchase a serviceable preowned houseboat that needs some renovations. Used houseboats can go for anywhere from a few thousand dollars to over $1 million for luxury craft that border on liveaboard yachts. Shiver me timbers!

Here’s a rough estimate of the cost of building a houseboat vs. buying a used one.

Building From Scratch Cost	Preowned Houseboat Cost
$10,000 and up for 50 feet	$20,000 and up

Regardless of whether you’re planning to handle the build yourself or you intend to refurbish a used houseboat, you may need financing. How to pay for it? Not with a traditional mortgage. Options include a boat loan and a personal loan.

Homeowners with sufficient home equity may be able to launch their houseboat plans with a home equity line of credit (HELOC), home equity loan, or cash-out refinance.

Recommended: How to Find a Contractor

Factors That Affect the Cost of a Houseboat

Houseboat living has caught on with some retirees, who want to downsize home-wise.

It also could be a choice for minimalists and millennial homebuyers who think outside the box.

Not everyone, of course, will want to be a full-time liveaboard. Some water lovers will be OK with a basic houseboat for cruising and recreation, one that is maybe trailerable. Those are factors that will affect the cost of your preferred houseboat.

Here are factors to consider.

Size

The size of your houseboat will have a major impact on the cost of materials you’ll need. Are you planning to build a single-story or double-decker houseboat? Will this be something that would fit on a standard 50-foot pontoon base, or will you need something more robust to keep it afloat?

Taking the high-end estimate of $20,000 to build a basic 50-foot houseboat, that comes out to roughly $400 per square foot, assuming you don’t hire anyone to help with construction.

Bear in mind that these figures are a very rough estimate that was calculated across a broad average of houseboats.

Design

The design of your houseboat will have a large effect on your options when it comes to layout, maneuverability, and aesthetics.

Before you begin construction, you’ll need to decide on what type of hull best suits your houseboat. Aluminum pontoons are popular.

Catamaran cruisers are maneuverable and may be cheaper to build, but they often compromise on space. These designs are easily outfitted with motors and may be best suited for owners who intend to take them out occasionally.

Those looking for larger accommodations may prefer a type of house called a floating home, which is actually different from a houseboat. It often has a concrete hull and is meant to stay in one place, permanently attached to utilities. The price, though, will usually be much higher than that of a houseboat.

A few sailors may opt to build a yacht, which offers the ideal combination of maneuverability and living space. You’ll have to have a hefty check at the ready or prepare to borrow a boatload if you’re considering this option.

Materials

The most common materials used to build boats intended for habitation are aluminum and fiberglass, but in some cases steel and wood can be construction materials of choice.

A standard pontoon base can cost between $3,000 and $10,000.

The cost of interior finishes largely depends on your personal tastes. They can be affordable if you’re fine with a no-frills setup but can tack skyward for more luxurious tastes and larger vessels. Stainless steel appliances and granite countertops cost money, regardless of whether they go in a house or a houseboat.

Will you want a staircase and flybridge? Budget accordingly.

Location and Water Depth

The environment you intend to keep your houseboat in will affect how much you’ll have to pay to make it seaworthy.

The price of an inboard motor may start around $8,000, and a middle-of-the road outboard may be $15,000 and up. Depending on how large your vessel is, you may need to pay for a larger motor with more horsepower.

Federal regulations governing recreational craft prohibit the majority of houseboats from sailing in deep ocean waters. However, cruises along the shoreline, or in a lake or river, are acceptable options for capable houseboats.

Weather

Whether you decide to launch or keep your houseboat in freshwater or saltwater and local weather patterns will affect houseboat maintenance.

Saltwater is a tougher environment but has a lower freezing temperature than freshwater, which means that you likely won’t have to worry about ice forming in the water.

By contrast, if your houseboat will primarily be in freshwater, you may have to deal with ice. As water freezes into ice, it expands, which can damage your hull or rudder.

Permits and Regulations

Any recreational vessel must meet federal safety requirements and possibly abide by state regulations.

Average Cost of Living on a Houseboat Year-Round

The average cost of living on a houseboat is $11,500 per year, some sources say. This breaks down to around $1,000 per month. Some frugal houseboat enthusiasts report living on as little as $6,000 per year.

Most of these costs encompass mooring fees, utilities, and insurance, but you’ll also need to budget for repairs and applicable local fees. Some houseboat communities have a homeowners association that allows all residents to distribute community expenses like maintenance of the docks.

Does a houseboat cost less than a home sitting on terra firma? Generally, yes. You can build a houseboat for far less than a comparably sized single-family home. As a future liveaboard, though, you might want to compare moorage and other fees to the costs of maintaining a traditional home.

The IRS says a boat with cooking, sleeping, and toilet facilities can be a main or second home, so interest paid on a loan for your houseboat could be included in the mortgage interest deduction if you itemize.

The Takeaway

How much does it cost to build a houseboat? The cost could start at $10,000 for a DIY build and depends largely on size and materials. Hiring skilled labor will add to that substantially. An alternative to building a houseboat is buying a used one and making it your own.

How to pay for these nautical visions? One way, for qualified homeowners, is a HELOC brokered by SoFi.

Borrow what you need, when you need it, and access up to 95%, or $500,000, of your home equity.

Tap your home equity and chart a course toward a houseboat you’ll love.

FAQ

How large can a houseboat be?

Most houseboats range from 20 to over 90 feet in length and 8 to 20 feet in width. In most cases, 40 to 50 feet is the average length for a houseboat to be comfortable as a long-term dwelling.

How long does it take to build a houseboat?

A DIY houseboat project may take 18 months to complete, but the time frame will depend on whether you’re able to work on the houseboat project full time and whether you enlist any help. Remember to factor in time to obtain necessary permits or inspections for your area.

Where can I get financing to build a houseboat?

You may be able to finance your houseboat build through lenders that focus on marine and RV lending. Other options are a personal loan, a HELOC, a home equity loan, and a cash-out refinance.

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Photo credit: iStock/MarkHatfield

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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Buying an investment property to rent out or flip for a profit can be a great way to put extra cash in your pocket, but you may need a mortgage to pull it off.

Because there’s more risk involved for lenders, mortgage rates for “non-owner-occupied” property tend to be higher.

This article will discuss types of investment property loans, typical rates, and more.

Why You Might Need an Investment Property Mortgage

Purchasing a rental property or buying a fixer-upper could be a rewarding way to invest your money, but if you don’t have the cash to pay out of pocket, you’ll need another way to fund the deal.

For many, that means taking out an investment property loan.

Recommended: How to Shop for a Mortgage

Types of Investment Property Loans

The type of mortgage loan you choose can affect your interest rate and required down payment.

How you plan to use the investment property and the number of units it contains also will affect your loan choices.

Conventional and Government Loans

Experienced investors typically prefer conventional loans when buying two- to four-unit properties. Buildings with four or fewer units are considered residential and eligible for the same loans as a single-family home.

Those with five or more units require a commercial loan, which usually has a higher rate, higher down payment requirement, and shorter term.

FHA and VA loans, government-backed home loans, can be used to buy a two- to four-unit property with a low down payment or none at all, respectively, if you live in one of the units.
Is the sky the limit? Not exactly.

The Federal Housing Finance Agency sets conventional conforming loan limits each year that depend on the number of units (one, two, three, or four) and the cost of the area. Staying under a loan limit means you’ll most likely obtain a lower-cost mortgage.

But jumbo loans, which exceed those limits, have their place. Lenders set their own limits and other criteria.

FHA loan limits for one to four units are set at 65% of the new year’s conforming loan limits. There are no VA loan limits for active-duty military members and veterans who have full VA loan entitlement.

Home Equity Loan or HELOC

If you have enough equity in your primary residence, you may be able to take out a home equity loan or home equity line of credit (HELOC) to fund your investment.

Other Kinds of Financing

Finally, if you’re serious about getting an investment property, you can think about and read up on these options:

•   personal loan

•   cash-out refinance

•   hard money loan

•   owner financing

•   assumable mortgage

Understanding Investment Property Mortgage Rates

It’s no surprise that rising inflation influences mortgage rates and that rates have risen — but they’re even higher for investment properties. Though rental property mortgage rates can vary, they are often at least 0.50% to 1% higher than rates for a primary residence.

Why are investment mortgage rates higher? Lending to an investor is inherently riskier. While someone who purchases a primary residence is likely to prioritize the mortgage payments for that house, an investor often has their own primary residence to prioritize above the investment property, meaning they would likely default on the investment mortgage before their own.

•   If the investment property is a flip but doesn’t sell as quickly as expected, the investor must keep making mortgage payments on the home after investing money to renovate — and may struggle to do so.

•   If the investment property is a rental, a vacancy results in no rental income to put toward the mortgage.

Recommended: Home Loan Help Center

What Determines the Rate?

So what determines investment property mortgage rates? Fannie Mae and Freddie Mac set rules regarding conventional investment property mortgages, including rate increases for single-unit and multiunit properties. Beyond that, mortgage rates for rental properties depend on a few additional factors:

Credit Score

As with any loan, a higher credit score typically results in a lower interest rate for an investment property mortgage.

Recommended: 18 Mortgage Questions for Your Lender

Debt-to-Income Ratio (DTI)

The lower your debt-to-income ratio, the better your chances of loan approval — and at a better rate. To calculate your DTI, add all your monthly debt payments, divide them by your gross monthly income, and multiply the result by 100.

Generally, 43% is the highest DTI you can have and still qualify for a mortgage, but many lenders prefer to see a 36% DTI or lower.

The lender may factor in 75% of your projected rental income when calculating your DTI, which works in your favor.

Cash Reserves

Because you may not immediately make money from an investment property — you typically need time to find renters or to rehab and list — lenders often like to see that you have adequate cash reserves.

Cash reserves refer to liquid (i.e., accessible) money that you have set aside for use in an emergency; in this case, it’s to cover the mortgage until your investment starts showing some ROI.

Though it can vary by lender, having six months’ worth of mortgage payments is often a good start. Having even more could improve your chances of approval and a lower rate.

Loan-to-Value Ratio (LTV) on the Investment Property

As with a traditional mortgage, lenders consider the loan-to-value ratio on the investment property. LTV expresses the ratio between how much money you’re borrowing and the appraised value of the property.

The closer those two numbers are, the higher the LTV ratio (expressed as a percentage) will be. By making a larger down payment and financing less, you can lower the LTV and potentially increase your chance for approval at a lower rate.

Making a Larger Down Payment

On a related note, you might benefit from offering a larger down payment. Although you may get approval with only 15% down, a larger down payment may yield a lower rate.

Not sure where to start? You can use a mortgage calculator to see how different down payment amounts may affect monthly payment and interest paid.

Recommended: How to Buy a Multifamily Property With No Money Down

Getting a Lower Investment Property Mortgage Rate

Now that you know what determines a rental property mortgage rate, let’s see how you can use that info to potentially earn a lower one.

Coming in With a Good Credit Score

Other than an FHA loan, which is more lenient about credit scores, lenders usually require a minimum credit score of 640 for investment property loans; some set the barrier for entry at 680.

Regardless, catapulting your number into the high FICO score range can improve your chances of a lower rate.

Paying Off Debt

A lower DTI ratio may also improve your chances of approval and a lower interest rate. But repaying debt is easier said than done; you may need to wait on an investment property if you’re working toward paying down a lot of credit card debt.

Increasing Your Cash Reserves

Showing a lender that you can cover the mortgage and other expenses like renovations or maintenance increases the odds of approval. The more liquid money you have, the lower your interest rate could be.

The Takeaway

Investment property loans are a good way for investors to purchase real estate for a rental property or a house flip, but the rates tend to be higher than rates for mortgages for a primary residence. A lender may offer a lower rate depending on a credit score, down payment, debt load, and cash reserves.

3 Home Loan Tips

1.    To see a house in person, particularly in a tight or expensive market, you may need to show proof of prequalification to the real estate agent. With SoFi’s online application, it can take just minutes to get prequalified.

2.    Your parents or grandparents probably got mortgages for 30 years. But these days, you can get them for 20, 15, or 10 years — and pay less interest over the life of the loan.

3.    Thinking of using a mortgage broker? That person will try to help you save money by finding the best loan offers you are eligible for. But if you deal directly with a mortgage lender, you won’t have to pay a mortgage broker’s commission, which is usually based on the mortgage amount.

FAQ

Can I get a mortgage for an investment property?

You can if you qualify, but keep in mind that investment property mortgage rates are typically higher, and lenders may have stricter requirements for approval.

Do investment properties have higher mortgage rates?

In general, yes, because lenders take on more risk when lending to an investor than to a person or family shopping for a primary dwelling.

What’s the minimum down payment for an investment property mortgage?

The minimum down payment for an investment property depends on the type of loan you’re using.
For a conventional loan, you usually need to put down at least 15%. An FHA loan for an owner-occupied one- to four-unit property calls for a down payment as low as 3.5%; a similar VA loan, no down payment.

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Photo credit: iStock/Drazen Zigic

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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With Bitcoin’s price holding steady above the $20,000 mark for most of early 2023, there are hopes that the crypto winter of 2022 is thawing, and that BTC — as well as crypto prices in general — may recover some lost ground.

Bitcoin’s price has been on a wild ride since it launched over 14 years ago, on January 3, 2009. While that’s similar to most cryptocurrencies, BTC has been particularly volatile owing to the price surges of 2021, quickly followed by the dramatic declines during the so-called crypto winter of 2022.

In other words, those who bought Bitcoin (BTC) early and held onto it have typically seen phenomenal returns, but the fluctuations in Bitcoin’s price — as with all forms of crypto — have also led to considerable losses.

For crypto fans and investors curious about this space, the volatile price history of the world’s oldest and most widely embraced cryptocurrency can also be viewed as a much broader saga. Bitcoin’s story reflects the rise of decentralized finance (DeFi), the emergence of blockchain technology, and countless innovations that are changing how investors think of commerce as well as what the future of crypto might hold.

Bitcoin Price History

While some enjoy comparing Bitcoin’s price history to past speculative manias like Beanie Babies circa 1995 (or the infamous tulip bubble circa 1636), speculation is only one factor in any given Bitcoin price fluctuation.

Over the years, a fairly reliable pattern has emerged in Bitcoin’s prices. Every four years, the network undergoes a change called “the halving,” where the supply of new BTC rewarded to Bitcoin miners gets cut in half. This has happened three times so far. The first Bitcoin halving occurred in 2012, from 50 BTC to 25 BTC, the second in 2016, from 25 to 12.5, and the third in 2020.

As of July 15, 2022, the current reward for Bitcoin mining stands at 6.25 BTC.

In each instance, the price of BTC reached new record highs in the year or so following each halving event. This was typically followed by a Bitcoin bear market. After a period of consolidation, the price then moved upwards again in anticipation of the next halving, beginning a new Bitcoin bull market.

While the price of BTC can hardly be considered predictable, it’s useful to view the chapters in the Bitcoin price history and what it may mean for investors.

Bitcoin Price History by Year

Bitcoin Price in 2009: The Start

Price of 1 Bitcoin in 2009: $0

On October 31, 2008, the pseudonymous person or group known as Satoshi Nakamoto published the Bitcoin white paper. This paper introduced a peer-to-peer digital cash system based on a new form of distributed ledger technology called blockchain.

Then, on January 3, 2009, the Bitcoin network went live with the mining of the genesis block, which allowed the first group of transactions to begin a blockchain. This block contained a text note that read: “Chancellor on Brink of Second Bailout for Banks.” This referenced an article in The London Times about the financial crisis of 2008 – 2009, when commercial banks received trillions in bailout money from central banks and governments. This event helped mark Bitcoin’s original price at $0.

For this reason and others, many suspect that Nakamoto created Bitcoin, at least in part, in response to the way the events of those years played out.

Bitcoin Price in 2011: The Surge Pt. 1

Price of 1 Bitcoin in 2011: $1 – $30

The Bitcoin price in 2009 was barely above zero. Real adoption of Bitcoin began to take place about two years later, and a major Bitcoin price surge happened for the first time.

In 2011, the Electronic Frontier Foundation (EFF) accepted BTC for donations for a few months, but quickly backtracked due to a lack of a legal framework for virtual currencies.

In February of 2011, BTC reached $1.00 for the first time, achieving parity with the U.S. dollar. Months later, the price of BTC reached $10 and then quickly soared to $30 on the Mt. Gox exchange. Bitcoin had risen 100x from the year’s starting price of about $0.30.

By year’s end, though, the price of Bitcoin was under $5. No one can say for sure exactly why the price behaved as it did, especially back when the technology was so new. It could be that 2011 marked the launch of Litecoin, a fork of the Bitcoin blockchain — and other forms of crypto began to emerge as well — signaling greater competition.

In 2012, of course, Bitcoin saw its first halving, from a 50-coin reward for mining BTC to 25 coins. This set the stage for its precipitous growth. But the pattern of an 80% – 90% correction from record highs would continue to repeat itself going forward, even as much more Bitcoin liquidity would come into being.

Bitcoin Price in 2013: The Decisive Year

Price of 1 Bitcoin in 2013: $13- $1,100

In 2013, the EFF began accepting Bitcoin again, and this was the strongest year in Bitcoin price history in terms of percentage gains. The cryptocurrency saw gains of 6,600%.

Starting at $13 in the beginning of the year, the price of Bitcoin rose to almost $250 in April before correcting downward over 50%. The price consolidated for about six months until another historic rally in November and December of that year, when the price peaked out at $1,100.

This bull run saw Bitcoin’s market cap exceed $1 billion for the first time ever. The world’s first Bitcoin ATM was also installed in Vancouver, allowing people to convert cash into crypto.

It would be over three years before the Bitcoin price would reach $1,000 again. The Bitcoin price in 2013 bottomed out at -85% off its record high.

Amidst this volatility was a surge in crypto interest, with Dogecoin being one of the more notable coins to emerge at that time. Though considered a meme coin, Dogecoin still exists.

Bitcoin Price in 2014 – 2016: The Fallow Period

While the cryptoverse quietly exploded in this time period, with technological innovations that permitted a move away from proof-of-work to the less onerous proof-of-stake, as well as the emergence of smart contracts, and the real foundations of decentralized finance — Bitcoin was relatively quiet.

The price held steady in the $200 to $400 range for much of this time, but began to climb with the second halving in 2016 — and quickly reached five digits within the year after the halving, peaking at nearly $20,000 in December of 2017. Let’s take a closer look.

Bitcoin Price in 2017-2019: The Surge Pt. 2

Price of 1 Bitcoin in 2017-2019: $1,100 – $20,000

The Bitcoin price in 2017 breached the $1,100 mark in January, a new record high at the time — following the Bitcoin halving in July of 2016. By December, the price had soared to nearly $20,000. That’s a 20x rise in less than 12 months, and it was followed predictably by a decline through 2018 and 2019. Bitcoin wouldn’t see the other side of $20,000 until late 2020.

Like the 2013 price surge, the 2017 rally occurred about one year after the halving. What made this time different was that for the first time ever, the general public became more aware of cryptocurrency. Mainstream news outlets began covering stories relating to Bitcoin and other cryptocurrencies. This price rise largely reflected retail investors entering the market for the first time.

Opinions on Bitcoin ranged from thinking it was a scam to believing it was the greatest thing ever. For the believers, this was an opportunity to learn how to invest in Bitcoin for the first time, but there’s little doubt that the influx of retail interest in the crypto markets contributed heavily to volatility across the board.

Bitcoin Price in 2020: After the 3rd Halving

The crypto feeding frenzy was well underway by the end of 2019, with hundreds of new coins on the market. By January 3, 2020, Bitcoin’s price was $7,347.49 and it steadily rose as the halving in May of 2020 approached, shooting north of $9,100 that month, nearly a 25% increase in just a few months.

But that was just the start of a meteoric rise — and fall — for BTC that few will forget, and a phase of Bitcoin’s story that many tie to the pandemic. With millions of people worldwide confined at home from 2020 through 2021 (in some cases longer), online speculation became a widespread phenomenon. One offshoot of that may have been the biggest Bitcoin bull market to date.

Bitcoin Price Chart in 2021: An Epic Rise and Fall

In August 2021, the price of Bitcoin was hovering around $46,000, and by November 2021 BTC hit its all-time high of over $68,500.

Toward the end of 2021, however, the Bitcoin hash rate, a factor thought to have some correlation to the Bitcoin price, plummeted to around $47,000 — a loss of close 30%.

The price drop occurred partly as a result of China requiring its citizens to shut down Bitcoin mining operations. The country previously housed a significant portion of the network’s mining nodes. As a result, these computers had to go offline. Many believe this reduction in mining capacity was a key factor weighing on the Bitcoin price.

In addition, politicians and regulators raised concerns about the future of crypto laws and regulations, adding to the general mood that crypto mavens refer to as FUD (fear, uncertainty, doubt) — one of many crypto slang terms now in wider use.

But as 2021 shifted into 2022, the specter of inflation — in addition to the global energy crisis and geopolitical turmoil thanks to Russia’s war on Ukraine — put a drag on the price of BTC and just about every other major crypto.

Bitcoin Price in 2022: Onset of the Crypto Winter

From January 2022 through May, Bitcoin’s price continued to sag as the Crypto Winter officially took hold. By May, BTC dipped under $30,000 for the first time since July of 2021.

What Is a Crypto Winter?

Unlike a bear market, a crypto winter doesn’t have specific parameters or criteria. But, similar to a bear market, it does mark a period of steady and sometimes precipitous losses that pervade the crypto markets as a whole.

Crypto Struggles in the Face of Crises

This downward trend proved to be the case as crypto prices overall declined through Q2 — partly affected by the collapse of stablecoins like TerraUSD and Luna. In June, Bitcoin fell below $23,000.

Crypto prices struggled through Q3 of 2022, and took another hit in November 2022, thanks to the sudden failure of crypto exchange FTX.

The exchange crashed amid a liquidity crunch and allegations of misused funds by its CEO, Sam Blankman Fried. A bailout by Binance was possible, but the deal fell through because of FTX’s troubled finances and implications of fraud.

The rapid downfall of FTX shocked the financial industry, and the crash had a massive ripple effect throughout the crypto market, affecting investor confidence. Widespread worries about inflation, as well as steady interest rate hikes, affected broader markets. Bitcoin’s price continued to be a barometer of crypto health in many ways, plunging below $20,000 by the end of December, 2022.

Bitcoin in 2023: Hopes for a Steady Recovery

As of February 27, 2023, Bitcoin’s slow but steady price increase to about $23,300 sparked hopes that the crypto winter had begun to thaw, with other cryptocurrencies showing similar price patterns in Q1.

Also, Bitcoin mining has reached a new high as February draws to a close. This signals interest from miners, which some traders are taking as a bullish indicator.

Although inflation has yet to be tamed in the wider markets, there is a sense that some of the measures the Fed has taken may encourage a soft landing.

What Factors Affect Bitcoin’s Price?

Bitcoin trades constantly on many different exchanges. The price is discovered through buyers and sellers agreeing on prices at which to settle trades. It can be said that “the market” determines the price of Bitcoin.

Of course, many external factors may influence the price at which people are willing to pay for Bitcoin.

1. Sentiment

With any asset, general market sentiment can influence present and future price action. This tends to occur in cycles.

It often happens that as more and more people grow increasingly bullish on something, the price keeps rising until everyone thinks it will never go down again. Then at some point, things change, and sentiment starts shifting the other way. Once most people think the price will never go up again, that usually indicates that prices have come close to bottoming.

This is why CNN has something called the “Fear and Greed Index”. The index measures sentiment across financial markets at large using seven broad indicators. These indicators measure things like Bitcoin stock price volatility, call-to-put ratios, and the amount of stocks making new highs vs the amount of stocks making new lows.

2. Mining

Bitcoin mining also impacts the price of Bitcoin. Miners are powerful computers that process transactions for the network, and they’re the source of newly minted bitcoins.

Because miners create and accumulate new coins, what they tend to do as a whole can make a big difference in market prices. Miners have to sell Bitcoin to cover electricity and maintenance costs. But what they choose to do with their remaining coin can impact prices.

For example, when miners anticipate the future price of Bitcoin to be higher than it is right now, they could choose to hold most of their coins, reducing overall supply on exchanges. This would create support for prices.

On the other hand, if miners think the price of Bitcoin will fall, or they need cash today for some reason, they could sell their coins, increasing the supply and potentially driving prices lower.

3. Money Supply

Some may argue that the number one factor affecting the price of Bitcoin is the growth in money supply. When central banks print more money, the price of Bitcoin tends to rise in almost direct proportion to the amount of new currency created.

This is part of the supply-and-demand element in Bitcoin’s price. More and more dollars (or Euros, Yen, Pesos, etc.) wind up chasing an ever-dwindling supply of bitcoin. The new supply of fiat currency keeps growing while the new supply of bitcoin gets cut in half every 4 years (a process known as Bitcoin halving).

4. The Network Effect

Some say Bitcoin’s true value lies in the Bitcoin network. In other words, how many people are using Bitcoin.

A rough analogy would be social media networks. We tend to measure the value of a social network by its number of users and how active they are on the platform. Facebook and Instagram both have over a billion users each, with at least half of them logging in everyday in the case of Instagram. This is the main reason people think these networks have value.

With the Bitcoin evolution, the more people who create cryptocurrency wallets, convert fiat currency to Bitcoin, and spend or store those coins, the more valuable Bitcoin could become. And as the price of Bitcoin rises, more people tend to join in the network, potentially creating a positive feedback loop.

The Takeaway

As of February 27, 2023, Bitcoin seems to be regaining some of the luster it lost during the crippling crypto winter of 2022, holding fairly steady above the $20,000 mark (but far off its November 2021 peak of about $68,000).

Nonetheless, the bigger story of Bitcoin’s price history is far more impressive. As the oldest and still the largest form of crypto, BTC has gone from being worth a fraction of a penny to about $23,000 today — with a staggering range of price highs and lows in between.

If Bitcoin continues to grow at even a fraction of the rate it has over the past 14 years, the gains for long-term crypto investors would outpace that of most other asset classes. However, past performance doesn’t guarantee future results.

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Photo credit: iStock/simarik

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SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

²Terms and conditions apply. Earn a bonus (as described below) when you open a new SoFi Digital Assets LLC account and buy at least $50 worth of any cryptocurrency within 7 days. The offer only applies to new crypto accounts, is limited to one per person, and expires on December 31, 2023. Once conditions are met and the account is opened, you will receive your bonus within 7 days. SoFi reserves the right to change or terminate the offer at any time without notice.

First Trade Amount		Bonus Payout
Low	High
$50	$99.99	$10
$100	$499.99	$15
$500	$4,999.99	$50
$5,000+		$100

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