Volatility - major reasons for ?! | Bitcointalksearch.org

deisik

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Quote from: HasHe on June 28, 2017, 10:30:01 AM

The increase and decrease in demand of bitcoins is the main reason for volatile nature of biytcoins.In other currencies,governments control it and to maintain stable price,governments also changes their policies as per the market situations.But in bitcoin,there is no such central body to control the price.Bitcoin directly reflects its value all time.Hence the volatile nature

Big governments don't need to interfere very often

And when they do in fact interfere in the market, it is certainly not about "fixing" the exchange rates but rather affecting the national economy itself. The currency exchange rate itself is an outcome and result of the economic policies that respective countries are following. My point is that it makes no sense to regulate the exchange rate directly as well as go for stable rates (as the primary goal, at least). Stable rates are the effect of strong and robust national economy, and that should be the top priority

Boseda

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In my opinion the main reason of volatility is that Bitcoin is only used for speculation and it doesn't have an economy yet.

x8currency

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There is a new token coming up that will tackle the issue of volatility through automatic diversification and AI trading. ICO is on September 14.
https://bitcointalksearch.org/topic/m.21143521
https://x8currency.com/
slack: https://x8currency.herokuapp.com/

HasHe

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The increase and decrease in demand of bitcoins is the main reason for volatile nature of biytcoins.In other currencies,governments control it and to maintain stable price,governments also changes their policies as per the market situations.But in bitcoin,there is no such central body to control the price.Bitcoin directly reflects its value all time.Hence the volatile nature.

deisik

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Quote from: Amph on June 28, 2017, 06:40:40 AM

well the main reason is very simple as long as bitcoin is based on supply and demand there will be volatility

fiat it's not based on that and it's the reason why the value is fixed, the spread is due to economy trading or financial problems

All major fiat currencies have floating exchange rates

Which, as you can easily guess, are determined by the same good old supply and demand. It kinda seems you may want to learn more about Forex and specialized currency futures and options exchanges out there (e.g. CME or MICEX). When you are done, you will learn that the rates of such currencies as the US dollar (more specifically, the US dollar Index), Swiss franc, Euro, etc. are determined in pretty much the same way as the prices of Bitcoin and its buddies, altcoins

deisik

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Quote from: classicsucks on June 27, 2017, 04:53:12 PM

Quote from: deisik on June 25, 2017, 08:46:24 AM

I'm still waiting for your explanation how front-running actually works. Regarding my trades, if I place an order and it gets executed, I receive exactly the amount I'm buying minus trade fees. No one is taking any fraction from my trades apart from what I know beforehand (i.e. fees).

Although I don't owe you any explanations, I can't help but laugh a bit. If you place an order and it gets executed at the price you chose, what else would happen, duh? It's not like the exchange will tell you "We bumped the price a little" and it's on your statement, LOL. The point is that you bought a fraction higher than spot and sold a fraction lower than spot. Frontrunning is when the exchange places a sell/buy orders in front of buy/sell orders to lift/drop the price a bit and profit off both sides of a trade. I don't know how to explain it to you any better... or are you playing dumb?

Finally, when you close an order on an exchange, did you really think you're buying/selling coin? It's just a float until you withdraw fiat or coin. And therein lies the problem...

I couldn't make out what you meant to say by that

You may have to try explaining it better or continue to laugh in loneliness (as they say, the louder the laugh, the emptier the head). Just in case, front-running client orders doesn't mean that the exchange places a sell or buy order "in front of buy or sell orders to lift or drop the price a bit". You can't earn sure profits by doing that, and if exchanges did actually place their orders in front of the orders of their clients (as you mean it), there wouldn't be anything criminal, illegal or otherwise condemnable in that. A hint, front-running has nothing to do with that. You may want to go and find out what it actually means (or you can continue laughing, I don't care)

doomistake

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Quote from: Wipro on June 21, 2017, 08:04:09 AM

Quote from: hv_ on June 21, 2017, 07:55:41 AM

I just try to find the major reasons for the very high volatility of bitcoins price we all encountered over the last years.

1) Exponential Growth ( in trust and usage)

It's clear this is a very strong reason to cause price volatility, since we have double and double of requesters that all needs to get coins from a scarce bitcoin supply.
So we see price squeezes all over the time (more up than down). Further we have no or lost experience with such exponential growth process esp in money (last adoption was gold some 1000 years before)

2) Evaluation Base CCY ?
I have the strong suspicion that bitcoins volatility is positive correlated to the volatility of the lowest trusted fiat currencies' volatility in the world.
Sadly I cannot proof this by averaging the historical volatilities of a 'poor's currency basket' of (Zimbabwe$, Venezuela$, Egypt pound, Jemen slotty, Syria Dinar,..xyz...) but I estimate, that we have same volatility there as in bitcoin. And all people living in those countries should be way better off with bitcoin and it's vola!
We just see and measure BTC/USD - volatility is high, but we forget where it's based on - on the poor ccys all together - but they are dominant here.

3) Heterogeneous Markets
We now have some 100 different exchanges and local places where you can exchange you bitcoin against any other fiat or crypto. There is no condensed order book / matching for a trade and limited arbitrage due to capital protection of some states.
I'd guess we'd see a fraction of the actual valtility,if we would have a (ideal) single world exchange, where all must trade BTC/USD (USD is just a default example for a world fiat and rest crypto ccy) .

Any other reasons you could see?

Bitcoin supply and demand will rate the volatility of the bitcoin value. As adoption rate increases price will move forward and if there is any market fall happens then bitcoin related business or project that time will see the dump in price.

Precisely, because bitcoin would never be on where it is right now if there are no bitcoin users, investors, and so on, because of the demand and supply, bitcoin population is growing even more than we are expecting. Bitcoin is not popular to the ordinary people who only know fiat where they are getting their source of income. This volatility is the reason why bitcoin is giving us hope that someday it could make us rich because its price would be higher than the sky in the near future.

If we are going to hold our bitcoin and continuing what we are doing right now, and not spending our bitcoin on the things that could be bought by fiat or something, then I could assure you that in the near future, expect that you are going to have millions of money in your hand.

Basmic

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Price regulation, Fiat is due to the policy of the national Bank. Bitcoin has no such mechanism, so it is doomed to regular racing. When people are excited about it I want to remind you that the exchange is always someone losing money, but at the expense of other people make them. To always be lucky and not so every trader is always in risk.

DoublerHunter

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Quote from: Amph on June 28, 2017, 06:40:40 AM

well the main reason is very simple as long as bitcoin is based on supply and demand there will be volatility

fiat it's not based on that and it's the reason why the value is fixed, the spread is due to economy trading or financial problems

also another big reason is because the distribution is still bad, I can bet my ass hat there are still big early adopters in play

Bitcoin is decentralized so we can expect too much price movement for bitcoin because it is just a flexible currency because of the dependency in supply and demand but even though the value or price of bitcoin is not fixed and it is often moving up and down, it is still a good thing to have for a currency because we can be a trader and make money from it.

Amph

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well the main reason is very simple as long as bitcoin is based on supply and demand there will be volatility

fiat it's not based on that and it's the reason why the value is fixed, the spread is due to economy trading or financial problems

also another big reason is because the distribution is still bad, I can bet my ass hat there are still big early adopters in play

xderek

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Quote from: joebrook on June 27, 2017, 10:11:45 AM

Quote from: ladydark on June 26, 2017, 07:49:56 AM

Bitcoin is a decentralized currency and its price either increases or decreases in proportion to increase or decrease in demand for bitcoins.There is no authority or governing body to control bitcoin price.Bitcoin price is driven by the support of bitcoin community.So its quite natural taht bitcoin price is highly volatile and it would remain volatile till last.Even volatility is the main feature of bitcoin due to which traders gain profits from the difference in price.

So the people are not patronising the currency as they used to do,or are they questioning its valuability now, from what's happening it's going to be hard for it to pass the $3000 threshold.

The only governing force is kinda the buy power and the vision of the people. If people or India or Japan choose to look at bitcoin, it would pass any prediction. While governments try to have the least control by legislations.

DOGE12321

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Yes. I can see another point. Add 'lesser mainstream attention'. Bitcoin is highly underrated at the moment. Not many people use it, compared to fiat. When suddenly a large company like Amazon or eBay accepts Bitcoin, media companies would jump on it. Thus new members in the network increase demand...for a short time. Afterwards, people begin realising how useless Bitcoin is in their real life and leave the community. When masses of people leave the network like this, the price drops.

Rahar02

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Quote from: gamerfan on June 21, 2017, 08:51:46 AM

I think the only reason for that is because Bitcoin does not have a real economy yet. It is just used for trading purpose, unline other traditional currencies which are used to buy and sell stuff

Indeed, mostly people use it for trading but there are a lot of people who store their wealth in bitcoin as well.
Another reason why bitcoin price so volatile because it's decentralized digital currency, different with fiat currency such as USD or Euro which backed by government.
Without any backup, bitcoin stand alone with people who support and trust it'. Bigger market cap or higher price make it more volatile, because if people sell their bitcoin could make its price drop even more.

GreenBits

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The chief reason for bitcoin's volatility, in my opinion, is the lack of investor experience, and lack of capitalization (weak/thin books). Half of the users that trade bitcoin are children, or at least don't speak English so good, as evidenced by the trollboxes of the various exchanges. The lack of an actual trading education, coupled with the low total capitalization on some exchanges (HitBTC is a good example), magnifies every pump, and worsens every dump. The term is called weak hands, but it's more than that; people in this space react too much off of news, and way too late after the news has dropped. In other words, lack of trading experience Wink

The price is also manipulated to shit, because of the low total capitalization Wink

compared to forex, these positions are drops in a bucket.

classicsucks

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Quote from: deisik on June 25, 2017, 08:46:24 AM

I'm still waiting for your explanation how front-running actually works. Regarding my trades, if I place an order and it gets executed, I receive exactly the amount I'm buying minus trade fees. No one is taking any fraction from my trades apart from what I know beforehand (i.e. fees).

Although I don't owe you any explanations, I can't help but laugh a bit. If you place an order and it gets executed at the price you chose, what else would happen, duh? It's not like the exchange will tell you "We bumped the price a little" and it's on your statement, LOL. The point is that you bought a fraction higher than spot and sold a fraction lower than spot. Frontrunning is when the exchange places a sell/buy orders in front of buy/sell orders to lift/drop the price a bit and profit off both sides of a trade. I don't know how to explain it to you any better... or are you playing dumb?

Finally, when you close an order on an exchange, did you really think you're buying/selling coin? It's just a float until you withdraw fiat or coin. And therein lies the problem...

Pente

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Volatility is a result of to much energy passing through a system. Read Chaos by James Gleick to see how deterministic behavior switches to non-deterministic behavior (chaotic). For Bitcoin, money is the energy entering the system. This results in runaway valuation which then collapses to a new high.

This will continue till cryptocurrency reaches it's final valuation of the economy. At this point, we will switched to a more steady and predictable growth. I am guessing this final growth will be around 12% per year in value. There may be no fiat currency left to measure it though, you will just see the price of goods slowly dropping in terms of BTC instead.

jc89

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Quote from: JimmieA on June 24, 2017, 06:29:53 AM

Price fluctuation of btc is largely affected by btc demand in the market. This changes over time, thus creating a rise in price, is also one of the opportunities to make a profit..Market stability is maintained only when btc supply and demand are close together, so btc prices will stabilize.

Yes but not only the demand, the supply also plays an important role in the fluctuation of Bitcoin's price. Bitcoin's price is dictated by the number of demand with respect to the available supply in the market so both demand and supply have their roles. And as to what you've mentioned (I will add the supply), bothe demand and supply changes over time, thus making the price vary depending on the demand-supply relations.

The stabilization of Bitcoin's price is not dependent on the closeness of BTC's demand and supply. Even they are far apart, stabilization may also occur considering that their proportions grows simultaneously.

joebrook

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Quote from: ladydark on June 26, 2017, 07:49:56 AM

Bitcoin is a decentralized currency and its price either increases or decreases in proportion to increase or decrease in demand for bitcoins.There is no authority or governing body to control bitcoin price.Bitcoin price is driven by the support of bitcoin community.So its quite natural taht bitcoin price is highly volatile and it would remain volatile till last.Even volatility is the main feature of bitcoin due to which traders gain profits from the difference in price.

So the people are not patronising the currency as they used to do,or are they questioning its valuability now, from what's happening it's going to be hard for it to pass the $3000 threshold.

deisik

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Quote from: iamTom123 on June 26, 2017, 10:54:09 AM

As to volatility, it can be spurred by the fact that Bitcoin is still that really so big and can still be manipulated by groups who have the financial clouts to do so. Plus recently there were entrance of new Bitcoin holders and they can easily be swayed to sell for just very simple reasons

You meant to say not so big, right?

This is certainly so, but this is surely not all. Before Bitcoin got to well over 4 digits, volatility wasn't that insane, though Bitcoin obviously couldn't be bigger at that time than it is now. The real systemic cause of high volatility is the price itself as well as Bitcoin fixed supply. If we assume that monetary supply remains more or less the same, at least, short to medium term (which is a good assumption), the higher price necessarily means that the market supply is diminishing, but that leads to less liquidity (supply side, before all) at higher prices which makes markets a lot more prone to greater volatility

hv_

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Clean Code and Scale

The combination of whales (long ETH for 30Mio) , thumb traders (sell all at once), pre-mature exchange (GDAX) and very thin order books

-> leads to monster volatility!

http://video.cnbc.com/gallery/?video=3000631102

Topic: Volatility - major reasons for ?! (Read 2174 times)