Topic: Volatility - major reasons for ?! - page 2. (Read 2174 times)

I can feel that we are now entering a stage where people are gradually questioning anything related to Bitcoin and this can be one of the ultimate reasons behind the continuing drop of Bitcoin and the whole cryptocurrency market in general. People are getting back to reality...slowly moving away from the speculative and very positive views expressed since the beginning of this year.

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.

Volatility have been serving many traders well, that is a fact that should also be taken into consideration. Although it can help Bitcoin if volatility rate can be lessen to a certain degree which can make it more popular.

All markets, including cryptocurrencies, have volatility. All markets depend on faith. There isn't a company or resource behind bitcoin so there is no wonder there is volatility.
There are ways to reduce volatility: for example, invest in more cryptos or even invest 60% in stocks and 40% in cryptos.
It's extremely weird for any rational person to be surprised about volatility.

The gold price dropped heavily this morning. Reason was a fat finger issue / human stupidity issue: A guy just mixed ounces and lots and even gold markets are very thin / low liquid.

Same could happen in bitcoin's thin markets as well.

More reasons to be unveiled....  

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.

I try an explanation:
The major reason of the volatility is because lots of people/investors own lots of bitcoins. Everytime these guys (whales) buy or sell, it has an impact on the market. This impact is amplified/followed almost systematically by a "shockwave" (the small investors/traders are following the trend).
This is just my idea..

The price of bitcoin has been on the rise in the past few months. Sometimes we experience drops and sometimes we have highs in the price. Personally, I feel there are a few reasons that can be attributed to the volatility of the bitcoin price:
1. Over 700 crypto-currencies exist. Bitcoin is used to buy other crypto-currencies, which increases demand for Bitcoin.

2. Bitcoin is up 166% to $2480 on June 25 from $935 on March 24.

3. Japan approves Bitcoin as a legal form of payment April

4. Blockchain technology gives credibility to digital currencies.

I'm still waiting for your explanation how front-running actually works. I'm not interested in hearing empty verbiage that you pour on me. I want to hear details explaining where and how front-running allows exchanges to earn profits. After all, it was your claim, not mine, so the burden of explaining is obviously on you, not on me. 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). For your information, the gold standard in the US ended in 1933 when the Fed had withdrawn US notes ("real dollars", which had nothing to do with the Fed) from circulation. The latter had been fully redeemable for gold until they were declared obsolete

You may want to go and learn the history of the American dollar

Ohh, you again, dumbazz... should've kept you on ignore, but I took the bait...

Front-running is a very simple concept. Google it if you can't grasp it. If front-running is done by a bitcoin exchange, it's easier than what Goldman and other market-makers currently do, and near impossible to detect. Cryptsy got caught, there is an academic paper about the Gox-rigging (post mortem of leaked trade logs), and Bitfinex is currently getting arbitraged for doing it. Poloniex is more sneaky and cuts thin slices of cheese off the margin traders, and occasionally flips a "circuit breaker". But nobody is "taking anything extra from your trades", LOL, how would you know?

Federal Reserve bank was created in 1913 - effectively the end of USA gold standard. Private ownership of gold was made illegal in the 1930s and some gold was even confiscated shortly thereafter. Gold certificates were unredeemable from this point onward. Only foreign governments were allowed to redeem USD for gold. Nixon "closed the gold window" in 1971, but reserves were very fractional by that point anyway.

Any other questions?

At the moment the infrastructure and landscape that is shaping Bitcoin is in flux and ever changing. Once more and more mainstream buyers and holders of Bitcoin enter the market as opposed to hit and run speculators, we should see a more stable price evolve. There is also the fact that Bitcoin is limited in supply so if demand skyrockets, so will the price.

Oh, it is you again with your amateurish crap

I'm curious if you really understand what front-running actually means (there can be a few different ways to do it). There is no sense to front-run any trade (as you claim), and I don't see what you mean by "taking a small fraction from each transaction" (beyond the regular trade fee). To tell the truth, I don't see anyone taking anything extra from my trades. Cryptsy had been caught by directly and openly changing the order queue (if that is your point), but this is not what front-running client orders typically means (and that might in fact have been a bug in their trading engine). And just in case, dollar backing by gold ended less than 50 years ago (see the Bretton Woods monetary system)

Methinks the volatility is honestly just a bunch of bullshit this is like the most heavily manipulated market you can participate in; no regulations and it doesn't take a lot of fiat to manipulate some of the exchange. Just deep pockets or coordinated selling/buying. The price moves so much because the investors are so inexperienced, and professional traders are making a killing off of inexperienced traders that are reactionary and undisciplined. It alsooves because whales want it to move. Mark my words, the price of bitcoin is being depressed until corporate American can buy in. It will quickly become fully regulated, and the price will soar. Lobbies will see to that. Otherwise, it will be an alt, mostly ETH.

There is no agreed upon way to value a bitcoin. Hence, a price borne completely on speculation won't be very stable.

They cant really be separated because things normally goes on this way and its part of economic thing not only existing on bitcoin but all things that surrounds us we can eventually saw it on everyday living and yes supply and demand does really matter. It just a normal thing for the price to rise up when theres demand and the supply is limited then expect value would really change up.

I agree with you, the volatility of the bitcoin price is always depending in the demand and supply and you can't split those things because they are very related to each other, if the demand goes up then the supply goes down and if the supply goes up then it means that the demand is going down so it is very related to each other and as long as we are maintaining the demand that we are getting right now then the price will keep going up.

LOL, the term "fiat currency" specifically means money created by government decree, with no explicit backing other than the rule of law and violence by that government. For example, gold and silver backing of USD ended 100 years ago.

I'm surprised that nobody has pointed out that Bitcoin price can easily be manipulated by EXCHANGES. In fact, it has been proven that Mt. Gox increased the BTC/fiat exchange rate by about 10x, before the whole thing came crashing down. Many may not realize that exchange transactions are not recorded on the blockchain, only with withdrawals and deposits go to the bank and blockchain records. An exchange can sell you "bitcoin" or "dollars" all day even if there is nothing to back it. An exchange can "buy bitcoin" from itself all day long as well. Naturally this causes increases in the bitcoin price. Of course exchanges and traders can arbitrage each other, but they can also work together and collude to drive the price upward (or downward). Finally, exchanges can "front-run" any trade - here they simply buy or sell milliseconds before you do, taking a small fraction from each transaction (on top of any fees they charge). It is known in the fiat financial world that Goldman Sachs and other market-makers front-run every day 24x7, using high frequency trading datacenters.

None of this price-changing activity by exchanges would be illegal - the Bitcoin space is still largely unregulated. Mark Karpeles went to jail for one year for "fraud", but that was simply for misrepresentation and lying. Given this environment, I don't see why and exchange wouldn't engage in at least some price manipulation... likely they would be a bit smarter than Karpeles was...

Yes, so I want to correct this that price fluctuations are not only determined by the demand but also the amount of available bitcoins (supply). These are basically the factors of Bitcoin's volatility.

These whales are only whales yet since the real whales like Black Rock and co are not or very tame in the game and the daily trading volume is that of a poor country's currency.

At its heart its solely supply and demand that is the cause of volatility. Aside from large cause and effect cases trying to be logical and pin point clear event can be challenging as markets aren't a rational beast.

I'd say one of the biggest reasons at the moment is going to have to be all of the tons of people joining in on Bitcoin thinking it's going to be 'easy money' for whoever gets in on it fast, so what it's doing right now is making a HUGE DEMAND for a currency that is really IMO being used for mostly trade at the moment. This is one of the core reasons, but some of the other reasons are going to be the amount of money that's being put into cryptos in general (not just Bitcoin) and these people need a currency to exchange, which is always bound to be bitcoin.

Whales are the ones that are making this volatility a thing, or an issue, these and the day traders are the people that are bound to make a SHIT TON of money from the volatity being higher as they have a higher margin to be able to catch Bitcoin on and make a buck.

"You can get much further with a kind word and a gun than with a kind word alone"

Apart from that, I can't really fathom what do you mean by Americans investing "a lot of money to spread the dollar around the world". What money do you refer to here? Isn't dollars that money exactly? In a certain sense, they really poured a lot of money into the advancement of their economy, but that's what many countries do anyway. As to me, most of dollar popularity was due to the fact the US was not particularly affected by the two devastating wars that had left half of the world (and the best half of it) in ruins

Wake up now, no fiat currency out there is still backed by gold, it used to be back in the days, but not anymore. As a matter of fact, government issued currencies are backed by nothingness, that is the reason, they print enormous quantities at will and a chief reason inflation is already double digits in most countries.
 
Bitcoin supply for now is capped at 21 million coins and that cannot be faked, transactions are transparent and a holder has the final say what becomes of their money unlike the manipulations common with fiat currencies. These and more exquisite attributes keeps driving the demand for Bitcoin high and the resultant market dynamics creates the volatility we're seeing. However by the time Bitcoin is embraced by a lot more people, it is likely to become relatively stable.