Why Bitcoin price is so volatile? What are the major factors that drive it? - page 3.

jaberwock

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Quote from: nitrobetting on February 25, 2021, 06:31:56 PM

Volatility is usually the case with an emerging upstart market like Bitcoin. BTC price is almost entirely dependent on massive amounts of speculation demand vs. transaction demand. Most BTC holders are more interested holding bitcoins to profit off its increasing value than using it to utilize transactions.

There isn't really any value beyond its market price. Stability depends on how much adoption and overall development will progress over time.

I would agree to this but it then baffles me why the value of Bitcoins drops at certain times. The demand of Bitcoin in 2017 suddenly made it reach ATH and then it took 4 years to recover and double it suddenly this year. I know the value is increasing each day but what do those dumps suggest then, I wonder.

Quote from: oktana on February 25, 2021, 06:37:16 PM

For example, People buy it as speculative asset, so once it reaches their goal,
they sell (contributing to the volatility of the price). Based on the example I just gave,
one of the major factors that drive the volatility is the 24/7 buy and sell orders!

Continuous orders happen in almost all the markets like stock market and I have done currency trading in past and there are 24/7 orders there too. I think it has more to do with the anonymous nature of Bitcoins that anyone can sell any amount without being noticed and same for buying.

It feels bad to say but a lot of people who earn black money invest in Bitcoins because they cannot be tracked.

batang_bitcoin

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Quote from: goaldigger on March 02, 2021, 05:03:21 PM

Quote from: batang_bitcoin on March 02, 2021, 01:27:40 PM

Every market is known to be manipulated and easy to be manipulate by the whales. Comparing it with stocks and its nature of being volatile, I like bitcoin's volatility than the stocks. That's why I ponder that it is a better investment for which I'll benefit in the future and that's what's happening today and I did the right thing. Bitcoin's volatility can't be tolerated by everyone and if there are people who are good in stocks, they should stay on it.

Big investors will always move the market and that’s why Bitcoin becomes more volatile. I have to agree that Bitcoin is way more volatile and profitable compare to stocks but of course, this one will depend on the skills of every trader. There’s a lot of major factors that move the price of Bitcoin, its not just about supply and demand now, most of the time its about manipulation and the hype.

Bitcoin has been volatile since the day 1 with or without the big investors or those whales. It's already a character of bitcoin for which the whales have seen a good opportunity for them to make money from manipulating it. Most of them just got in when the price was already high and see how much money they can put into the market and move just as what they want to do with it. And being profitable in bitcoin, you don't actually to make yourself a trader, you just have to be good in buying and selling at the correct time and that's what's known as being a holder.

Shasha80

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For me, the volatile price that occurs in Bitcoin is due to supply vs demand, fear vs greed and 24/7 Bitcoin trading. These three factors make
the Bitcoin price move very significantly and uncontrollably. Therefore Bitcoin trading is a very high risk activity. Because at one time we can
make very large profits, at other times we can experience huge losses. Very good strategy and analytical skills are needed to be able to read
Bitcoin price movements.

goaldigger

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Quote from: batang_bitcoin on March 02, 2021, 01:27:40 PM

Every market is known to be manipulated and easy to be manipulate by the whales. Comparing it with stocks and its nature of being volatile, I like bitcoin's volatility than the stocks. That's why I ponder that it is a better investment for which I'll benefit in the future and that's what's happening today and I did the right thing. Bitcoin's volatility can't be tolerated by everyone and if there are people who are good in stocks, they should stay on it.

Big investors will always move the market and that’s why Bitcoin becomes more volatile. I have to agree that Bitcoin is way more volatile and profitable compare to stocks but of course, this one will depend on the skills of every trader. There’s a lot of major factors that move the price of Bitcoin, its not just about supply and demand now, most of the time its about manipulation and the hype.

batang_bitcoin

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Every market is known to be manipulated and easy to be manipulate by the whales. Comparing it with stocks and its nature of being volatile, I like bitcoin's volatility than the stocks. That's why I ponder that it is a better investment for which I'll benefit in the future and that's what's happening today and I did the right thing. Bitcoin's volatility can't be tolerated by everyone and if there are people who are good in stocks, they should stay on it.

Sinjokubhi

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Quote from: Bitcoin Guy on February 25, 2021, 04:20:54 PM

I am wondering why Bitcoin price is much more volatile than the stock market?

Let's just stick with Bitcoin only. Bitcoin have a market cap close to $1T as we speak and, yet, its price is still so volatile. Is it because the availability of bitcoins in the market is low as most people (especially the new institutional investors) are hodling?

Is it fair to compare Bitcoin (or crypto market as a whole) to a stock market like SP 500 (which currently has $31.61 trillion market cap)? If so, Bitcoin cap is only 3% of the SP500. Is it because of its relatively lower market cap which make it easier for its price to be manipulated (i.e., by a pump-and-dump)?

What do you think?

There are a lot of things that affect the ups and downs of Crypto Asset prices, some of which are as follows:

1. Crypto Asset prices depend on the balance of supply and demand. This is the law of the market. When Crypto Asset becomes popular and there is a lot of demand, the price will go up. Vice versa, if supply is high while demand is low, the price will fall.

2. News or media coverage can affect Crypto Asset prices. For example, if there is news about hacker attacks on crypto servers, or even good news about the adoption and infrastructure behind crypto technology.

3. Crypto Asset price volatility is largely based on hype which often keeps interest high. A reliable price drop can be built on by a post on social media and the utterance of a world famous person

4. Deliberate Crypto Assets. In the field of Crypto Assets, news can really have a significant influence on the situation in the market
The amount or quantity is from the crypto assets themselves. The volume of crypto assets such as Bitcoin is still very small and the distribution is uneven so that its value will greatly support the actions of the crypto asset holders in making sales or purchases.

slaman29

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I get why volatility is not attractive for people who want to keep value and protect in in the medium and short term, but then who does that for Bitcoin anyway? Even with MicroStrategy and all those putting money into BTC, they're expecting to store it there for many years, not just a few months or even a couple of years.

Day traders and leverage traders should love BTC for this volatility too. So why all the hate?

Silberman

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Quote from: Bitcoin Guy on February 26, 2021, 03:55:12 PM

If I may summarize the most popular answers - most people think that it is the low liquidity (available circulation) and a 24/7 non-stop trading environment that are responsible for the large volatility in Bitcoin. Of course, small market cap and price manipulation also play a part of it.

Quote from: Silberman on February 25, 2021, 11:54:28 PM

That is without a doubt a factor but another factor has to do with the fact that there are many traders that use too much leverage, in the forex markets it is rare for a trader to go above 5x in leverage while in this market people can use as much as 100x leverage regularly, this means that when the market goes against them and their positions gets closed this reduces the price significantly and a domino effect happens making the price to go down very rapidly.

How can one get 100X leverage on Cryptocurrencies market? Do you mean by placing $100 into the investment, I can buy up to $10,000 of cryptos?

That is exactly what I mean, there are many exchanges that offer this and this increases the volatility, this means that with a small sum of capital a trader can command and move more money than what it would be otherwise possible for him, however this is more notorious when the price goes down, have you ever wonder why the price goes down faster than when it goes up? This is because when the price moves too much downwards all of those people using leverage get a margin call and their positions get closed immediately, this means they have to sell their coins adding supply and decreasing the demand which lowers the price even more creating a chain reaction in the process.

RealMalatesta

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Quote from: Bitcoin Guy on February 25, 2021, 04:20:54 PM

I am wondering why Bitcoin price is much more volatile than the stock market?

Let's just stick with Bitcoin only. Bitcoin have a market cap close to $1T as we speak and, yet, its price is still so volatile. Is it because the availability of bitcoins in the market is low as most people (especially the new institutional investors) are hodling?

Is it fair to compare Bitcoin (or crypto market as a whole) to a stock market like SP 500 (which currently has $31.61 trillion market cap)? If so, Bitcoin cap is only 3% of the SP500. Is it because of its relatively lower market cap which make it easier for its price to be manipulated (i.e., by a pump-and-dump)?

I believe it's because of a simple reason - The BTC market is still new and still in propagation phase from one user to another and hence the demand in the market increases day by day. The reason you see why it drops is because there are some investors who invested early in BTC and they have the power to sell some BTC and bring the market down. Some are even playing with this kind of power, they have big amount of coins and they dump, buy at a cheaper price and then again repeat the same. It can go wrong too at times though, if the market doesn't drop as much they expect.

When we talk about stock market, because of the nature of stocks being centralized there is always a track of who holds how much and hence there is not much manipulation that can happen.

Just consider someone bought a pizza for 10000 BTC and I am giving this example just to emphasize how cheap BTC was in past and if someone by chance bought 100k BTC, they can play with the market and hence the big fluctuations and manipulations.

decodx

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Yes, Bitcoin price is extremely volatile. However, if you're looking to invest in the cryptocurrency market, you should be aware that Bitcoin has had one of the best performance records in the stock market history. So, you could potentially lose your money, or make a big profit. That's a big risk, but if you are comfortable with it, it could be a good thing. But more importantly, it could be a good way to learn more about the Bitcoin economy and how to profit from it.

CryptopreneurBrainboss

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Quote from: Bitcoin Guy on February 25, 2021, 04:20:54 PM

I am wondering why Bitcoin price is much more volatile than the stock market?

Let exclude all the obvious well known feature like its finite supply, decentralized nature, more demand than supply available in the market etc that others before me must have written on and go into some simple reason why bitcoin is so volatile. Firstly it's the hottest trend in the industry, everyone and most institute wants to get their hands on some bitcoin holding which is creating more awareness for the currency.

You can't expect all these to be happening and still want the price value of the most talk about asset and currency to not be volatile. We also have the features of the market still been patronize by noobs that are yet to understand how the market works which result to them fomo or fud at every news they read or hear.

isaac_clarke22

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Quote from: GreatArkansas on February 25, 2021, 05:42:23 PM

~

I am assuming aside from those three you mentioned that Bitcoin is global as well.
Many investors around the world could be throwing their money at and many could be dumping as well that's why the price is like a hell of rollercoaster ride.
This is being affected from factors like hype from media's headlines to it.
I guess it would somehow relate to the third point you mentioned though.

OcTradism

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Volatility is what traders need and are looking for their tradings. Real traders can not trade if there is no volatility on the market. They can trade but they never like such market.

Volatility is not a serious problem for investors who have long term perspective for their investment.

So what does volatility mean for traders and investors? Can it cause fear on them? I guess not, only for real traders and investors. For people who self call they are trading or investing but don't know what they are doing, they have fear always.

Bitcoin Guy

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If I may summarize the most popular answers - most people think that it is the low liquidity (available circulation) and a 24/7 non-stop trading environment that are responsible for the large volatility in Bitcoin. Of course, small market cap and price manipulation also play a part of it.

Quote from: Silberman on February 25, 2021, 11:54:28 PM

That is without a doubt a factor but another factor has to do with the fact that there are many traders that use too much leverage, in the forex markets it is rare for a trader to go above 5x in leverage while in this market people can use as much as 100x leverage regularly, this means that when the market goes against them and their positions gets closed this reduces the price significantly and a domino effect happens making the price to go down very rapidly.

How can one get 100X leverage on Cryptocurrencies market? Do you mean by placing $100 into the investment, I can buy up to $10,000 of cryptos?

Silberman

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Quote from: Bitcoin Guy on February 25, 2021, 04:20:54 PM

I am wondering why Bitcoin price is much more volatile than the stock market?

Let's just stick with Bitcoin only. Bitcoin have a market cap close to $1T as we speak and, yet, its price is still so volatile. Is it because the availability of bitcoins in the market is low as most people (especially the new institutional investors) are hodling?

Is it fair to compare Bitcoin (or crypto market as a whole) to a stock market like SP 500 (which currently has $31.61 trillion market cap)? If so, Bitcoin cap is only 3% of the SP500. Is it because of its relatively lower market cap which make it easier for its price to be manipulated (i.e., by a pump-and-dump)?

What do you think?

That is without a doubt a factor but another factor has to do with the fact that there are many traders that use too much leverage, in the forex markets it is rare for a trader to go above 5x in leverage while in this market people can use as much as 100x leverage regularly, this means that when the market goes against them and their positions gets closed this reduces the price significantly and a domino effect happens making the price to go down very rapidly.

dihari

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Since the first day when bitcoin start having a value, bitcoin price is drive by trust. People trust making bitcoin have a value, and that factor also drive these volatility.
But there's some other factors also impact bitcoin volatility; halving, miners, fud, news, government, and Elon.

crwth

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As for the other members here that have posted have said pretty much it but in addition to it, I think one that highlights it primarily is that the market is 24/7. It doesn't stop and the market is all over the world, not just domestic. Imagine all around the world people are looking at the price and making speculations into what the price could be in the following days, weeks, or years. It's basically warfare in which everyone wants to have that piece of the pie. Which is money.

A lot of people take advantage of the 24/7 factor by trading it with trading bots. It makes it even more volatile because it continuously trades for the trader and just does it non-stop. It's an addition to volatility.

posi

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There are alot of factors that make Bitcoin price to be volatile but what triggers the market volatility is the level of supply and market demand for bitcoin on various exchanges (which is also what make the price of Bitcoin to be different on each exchange site), negative news which causes panic sell and the market price prediction been built on speculations (which give some influential power to manipulate the market using message/post an example is Elon).

just_Alice

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Quote from: Bitcoin Guy on February 25, 2021, 04:20:54 PM

I am wondering why Bitcoin price is much more volatile than the stock market?

Let's just stick with Bitcoin only. Bitcoin have a market cap close to $1T as we speak and, yet, its price is still so volatile. Is it because the availability of bitcoins in the market is low as most people (especially the new institutional investors) are hodling?

Is it fair to compare Bitcoin (or crypto market as a whole) to a stock market like SP 500 (which currently has $31.61 trillion market cap)? If so, Bitcoin cap is only 3% of the SP500. Is it because of its relatively lower market cap which make it easier for its price to be manipulated (i.e., by a pump-and-dump)?

What do you think?

I think the main reason why Bitcoin is volatile is the fact that most people buy only a small amount of btc, and, yes, probably they rarely trade with what they have partially. Those who are interested in long-term investments just hodl, and the ones who are using btc for money transfer probably sell it right away, so that the price volatility won't affect the amount they send/receive. So, as a result, only a few people (relatively to all the btc users) acquire btc in large quantities and "play with it". And when they do - it affects the price drastically, because of their large-volume transactions that account for a big part of daily trading volume.

oktana

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For example, People buy it as speculative asset, so once it reaches their goal,
they sell (contributing to the volatility of the price). Based on the example I just gave,
one of the major factors that drive the volatility is the 24/7 buy and sell orders!

Topic: Why Bitcoin price is so volatile? What are the major factors that drive it? - page 3. (Read 539 times)