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.
Topic: Why Bitcoin price is so volatile? What are the major factors that drive it? - page 4. (Read 539 times)
February 25, 2021, 06:31:56 PM
February 25, 2021, 06:28:34 PM
You must know all crypto coins are possible for pump-dump, not only Bitcoin. 
Well, we cannot deny that sometimes the fast moves of Bitcoin price can be caused by manipulation. But it is not always to happen, mostly the volatility occurred because of the demands in the market. Since it is a bullish trend, people very fast to make decisions, sometimes buy more and sometimes sell more. This triggers the very volatility of Bitcoin price right now.
Well, we cannot deny that sometimes the fast moves of Bitcoin price can be caused by manipulation. But it is not always to happen, mostly the volatility occurred because of the demands in the market. Since it is a bullish trend, people very fast to make decisions, sometimes buy more and sometimes sell more. This triggers the very volatility of Bitcoin price right now.
February 25, 2021, 06:23:26 PM
I am wondering why Bitcoin price is much more volatile than the stock market?
It's decentralised to begin with, no central authority to control the whole ecosystem, and with a market that is open 24 x 7 x 365 it will be very volatile as there are constant buying and selling. And then we have whales and average joe traders competing against one another, so it will be a place like a battle ground so I don't think it i fair to compare it with Stock market like SP 500, it's very different.
February 25, 2021, 06:16:19 PM
Market trading of assets are war zones. There is natural competition coupled with greed, politics and other variables.
Observed low volatility trading doesn't imply competition, greed, politics and similar factors were removed from markets. But rather that traded assets tend to reach a point of equilibrium where those factors relatively cancel each other out to produce low volatility environments.
Concepts like stability, balance and low risk are correlated with low profit potential. While instability, imbalance and high risk are correlated with a high profit potential.
In bitcoin's case it is one of few inflation protected assets, trading in an environment which could be prone towards high inflation concerns. It is also deflationary which in ways is unprecedended. It is also controversial in ways with some claiming its good for society, and others claiming its the opposite. Bitcoin is far from reaching a point of equilibrium or consensus value and so it will be traded in ways which translate to volatility.
Observed low volatility trading doesn't imply competition, greed, politics and similar factors were removed from markets. But rather that traded assets tend to reach a point of equilibrium where those factors relatively cancel each other out to produce low volatility environments.
Concepts like stability, balance and low risk are correlated with low profit potential. While instability, imbalance and high risk are correlated with a high profit potential.
In bitcoin's case it is one of few inflation protected assets, trading in an environment which could be prone towards high inflation concerns. It is also deflationary which in ways is unprecedended. It is also controversial in ways with some claiming its good for society, and others claiming its the opposite. Bitcoin is far from reaching a point of equilibrium or consensus value and so it will be traded in ways which translate to volatility.
February 25, 2021, 05:54:40 PM
You can factor in the "openness" of its market. With such nature of the market, anyone and everyone can freely buy and sell at any given point in time they so do like. They can literally buy and sell millions or billions without restrictions in time and in the platform provided that they are properly ID'd for KYC and AML regulations. This perhaps is the main reason I see as to why bitcoin is highly volatile, though its nature as a highly-speculative asset can still be included together with the open-market nature as well.
Prone, yes, although even high market cap assets can still be a target to wash trading and price manipulation. Price alone isn't what matters in manipulation of assets. Volume plays a major role, and this is what most people used to exploit heavily together with the price in crypto and other asset class as well.
I believe having a lower market cap, is more prone to price manipulation, whales can able make some move to price themselves.
Prone, yes, although even high market cap assets can still be a target to wash trading and price manipulation. Price alone isn't what matters in manipulation of assets. Volume plays a major role, and this is what most people used to exploit heavily together with the price in crypto and other asset class as well.
February 25, 2021, 05:50:44 PM
Well, this is very technical for me but as far as I know why bitcoin is volatile just because of different possible factors, --that's it. There are too many factors to consider and the reason why it is volatile. In my own, the [market size, fixed amount, and the low liquidity] are those common reasons why bitcoin will fluctuate and becomes very volatile often. I think the trading activities will make bitcoin so volatile, those tiny, small, and becomes big transactions was contributed to becomes bitcoin move the price that can create volatility price.
February 25, 2021, 05:42:23 PM
Bitcoin price is volatile could because of some reasons.
Comparing other assets with Bitcoin especially with the stock market is good with the price only, but technically on fundamental, they are totally different. And they're also some charts that showing some correlations with other assets' price on Bitcoin price, just like gold.
I believe having a lower market cap, is more prone to price manipulation, whales can able make some move to price themselves.
- Speculation - different views on Bitcoin. If you are not familiar with or no knowledge at all of Bitcoin, you will not buy it.
- Bitcoin is still early - a lot of people still not introduced to Bitcoin. Less adoption, less trading volumes.
- 24/7 can be traded. Compare with stock markets that they have opening hours and closing hours for trading
Comparing other assets with Bitcoin especially with the stock market is good with the price only, but technically on fundamental, they are totally different. And they're also some charts that showing some correlations with other assets' price on Bitcoin price, just like gold.
I believe having a lower market cap, is more prone to price manipulation, whales can able make some move to price themselves.
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?
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?
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