The value of a Bitcoin is tied to the laws of supply and demand. To be precise, the price is determined only by what the market is willing to pay. If more people want to buy Bitcoins, then the price will increase. If more people want to sell, the price will decrease.
Bitcoin’s value can be volatile when compared to more established currencies and commodities. This can happen due to its relatively small market size. This volatility will decrease naturally over time as the currency matures and the market size increases.