The BTC/USD pair is an unconventional currency pair, so much so in fact, that some people would argue it is not even a currency pair at all. Some consider bitcoin a commodity rather than a currency, although it was indeed conceived as a sort of global digital money of the future. As such, it doesn’t make much sense to ponder whether this pair is a major or an exotic. For the mainstream financial industry, it certainly is an exotic. For the cryptocurrency industry, it is THE most important currency pair in existence, and as such, an undisputed major.
Although it was intended to be a currency upon its 2009 launch, and according to many, it is indeed nothing less than the currency of the future, bitcoin (BTC, XBT), is unlike traditional fiat currency, in just about every way. First of all, bitcoins are virtual: they do not have a physical form like actual coins or paper/plastic money. bitcoin is also much more than just a currency: it is also a decentralized payment system, within which all transactions are made on a peer-to-peer basis, without an intermediary. bitcoin is indeed a major disruptor of the traditional financial model.
Also unlike traditional currencies, bitcoin is not controlled or owned by any single entity. It truly is a global, decentralized currency-, payment- and banking solution. No one can “mint” or “print” more bitcoins than the limit set by its mathematical model. There will never be more than 21 million bitcoins in existence, which means that by its nature, bitcoin is a deflationary currency. Its subdivisions are mBTC (milibitcoin, 1/1,000 BTC), and Satoshis (1/100,000,000 BTC). Given the rising price of BTC, mBTC is slowly but surely becoming an accepted and used subdivision.
Originally a commodity money of silver, the USD is the world’s most popular reserve currency and the most traded currency on the Forex market. The USD is – one way or another – involved in the majority of global economic transactions. In fact, commodities such as gold and oil are traded almost exclusively in USD.
Controlled by the Federal Reserve, through the manipulation of interest rates, the USD is the national currency of the United States of America, first and utmost, but it is in fact used as a national currency by a surprising number of other countries. The majority of the world’s USD supply is in fact held outside the US.
The price evolution of the BTC/USD pair is generally set by supply and demand. There are obviously some important speculation-related pressures involved as well, which sometimes result in wild price-fluctuations. Despite these short-term ups and downs, the long-term direction of the pair is a decidedly bullish one. By its very nature – as explained above – BTC is a deflationary currency. On the other side of the pair, the USD is an inflationary currency. This dynamic alone would explain the firmly bullish long-term outlook of the pair, but there are other factors involved too, like the ever-increasing adoption of BTC.