Topic: Volatility - major reasons for ?! - page 3. (Read 2174 times)

I wonder how would be the volatility if we could exclude the speculation factor from the scene.

There are no fiat currencies today which are backed up any hard asset like gold or silver

It could be said that the US dollar is sort of backed up by oil (see petrodollar) but this itself is just an effect of the US grip over the world, that they can force foreign governments to buy oil for American dollars. In this way, it is rather the power of the state that is actually backing up the dollar, and it is true in respect to any fiat currency out there. But since there are quite a few currencies that had just been volatile at first and then turned to complete trash, this cannot be an explanation for Bitcoin volatility (i.e. the lack of state support)

For me the volatility happened because bitcoin is slipping, the last time when bitcoin transaction fee increase and the slow confirmation, a lot of people chose another alt coin to used, and alt coin is in a good stage this year so a lot of investor is investing in alt coin, but they only used it for trading, so its pumping and dumping activity and it cause volatility

For me the volatility happened because bitcoin is slipping, the last time when bitcoin transaction fee increase and the slow confirmation, a lot of people chose another alt coin to used, and alt coin is in a good stage this year so a lot of investor is investing in alt coin, but they only used it for trading, so its pumping and dumping activity and it cause volatility

There are no fiat currencies today which are backed up any hard asset like gold or silver

It could be said that the US dollar is sort of backed up by oil (see petrodollar) but this itself is just an effect of the US grip over the world, that they can force foreign governments to buy oil for American dollars. In this way, it is rather the power of the state that is actually backing up the dollar, and it is true in respect to any fiat currency out there. But since there are quite a few currencies that had just been volatile at first and then turned to complete trash, this cannot be an explanation for Bitcoin volatility (i.e. the lack of state support)

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 / Fragmented 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 volatility, 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?

This is the reason for the volatility. Since bitcoins are not backed up by anything, unlike in fiat currency where it is backed by gold and/or the government that issued the currency, this results to bitcoins being valued by the users themselves. That is why we see a whole lot of volatility here. Maybe in the future when there are more people using it then we could see some stability

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 / Fragmented 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 volatility, 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?

I think the main reason is because the price is undervalued. If bitcoin were trading at $100k a coin, then a swing of $10k in either direction (which would be huge by today's standards) would not be considered so huge.

I think BTC has this volatility because of the whale and their pumps and dumps. It is a main source of income for those who still cash out in FIAT... imagine what will happen when people won't cash out BTC so quick... a greater value for sure!

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 / Fragmented 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 volatility, 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?

I think one of the reasons is that Bitcoin is not tied to any real activity, for example, the currency exchange rate depends on the trade in goods and many other factors. Bitcoin depends much on the mood of the crowd.