What would it take?
Does the volatility settle if certain amount of merchants accept payments in crypto? Or should there be more people that would get paid in crypto? OR should there be a cryptoeconomy where people and businesses get income in crypto and spent the crypto?
Furthermore, could the volatility be even solved? I mean of more and more people are getting into Bitcoin, when would such demand cycle cool down?
I would like to know the economics behind it.
There have been many such threads. But let me answer it again. Practically if we look at marketcap of Bitcoin, it will take many years to reach a state of less volatility.
Bitcoin has a $42B market cap. This is nothing. Until this market cap grows into the trillions I don’t think Bitcoin will be stable enough. There just isn’t enough liquidity. When the Bitcoin is distributed in large population. It will tend to be stable. Market wouldn't be driven excessively by a single investor holding millions of Bitcoin.
Marketcap even just give a little CONTRIBUTION to bitcoin volatile, because :
- marketcap = price * amount in circulation.
- imagine someone who has huge amount of bitcoin such as
BTC500,000 or
BTC1 Million, he could still manipulate the price.
I think it's better if bitcoin amount is spread widely instead of just one man holding huge amount of bitcoin.
Then, it refers to bitcoin usability, when more merchants accept bitcoin payment and it has spread widely, then the volatility of bitcoin could be reduced.