Bitcoin Forum

This is a continuation of my argument with some forum member named TheQuin. You can see the beginning of this discussion here (https://bitcointalk.org/index.php?topic=2074565.msg25915642#msg25915642). Since this is off-topic in that thread, I start this one which is about this thing specifically. Everyone is welcome to chime in on this (provided you have something valuable to say, of course). Here are some quotes that would give you a clue what the whole argument is about (I prudently skip the part where the dude called me various vile names):



You didn't do that

Basically, all you did is just gave a definition of what volatility is. And while we are at it, I warn you to stay away from making value judgments such as "you just arrogantly dismiss" and similar things. I didn't dismiss anything, yet less arrogantly (I really don't care, so it is essentially an issue with your own perception), I just pointed out that you make statements or assertions that are irrelevant to the point discussed. Giving a definition of volatility is just one example of that (you can simply call it noise). In short, I know what volatility is. Hope this makes you happier somehow

High prices aren't going to help anyone, and it's the thing that's pretty shit. Like yes, it may end up helping out the miners and the people that are trading. But in the long run for Bitcoin it's not going to help the people that have been here from the start and want to see Bitcoin survive and thrive through these times. We want to see Bitcoin used by companies, people, etc. We like that the price is up, but does it do anything for us? No.

More volatility is going to kill us, sadly.

But how are we going to get there?

Note that Bitcoin itself may have to die eventually (don't shoot the messenger, yeah), as you yourself said succumbing to volatility issues (and it kinda looks there is no way back for it anyway), but what about other coins? They don't have to be another Bitcoin, a Bitcoin-like coin, i.e. just a vehicle for speculation without any real world use. Is it ever possible for some flavor of crypto to get there at the end of the day? I mean it being used by companies and people as a true means of payment? Or are we stuck in a sort of deadlock with any crypto ultimately turning into a Bitcoin?

Its true that the volatile nature of bitcoin price itself has stopped bitcoin from being used as a currency.If it had not been used by dark markets earlier,i think that its price would not have increased this much by gaining attention of more investors world wide,it would have been used as a currency for what mainly it was created.

I don't fully understand the logic behind there being more volatility at higher prices, in terms of dollar swings then sure but in terms of percentage swings I don't see how the higher price could lead to that? In fact I probably see more of the opposite, higher prices generally will mean more adoption, more adoption means money better spread means less possibilities for manipulation.

I don't think high prices mean higher volatility for sure , it just improves that that thing is really valuable and many people want to have it in their pocket.

BTC is already being used by some companies and a particular group of people, but saying that it will be adopted by the mainstream for everyday transactions is a negative. I think theres no need for that.

Why would I waste censorship resistance for a coffee transaction?

The high price certainly brings with it the high volatility it is very clear and clear. Speaking of Bitcoin, when a high fidelity arrives, there are sudden drops and then the old fiyata comes back. It happens at times when this is the opposite, but very rare. For example after segwit was canceled there were very interesting movements in the price of Bitcoin.

I'm curious what you actually see

Because if you looked at price charts you would certainly see the opposite picture. For example, when Bitcoin first reached the 6k dollar mark it crashed back to 4k, then it went up to almost 8k and corrected to 5.4k. Now we are at 15k, and how low do you think we will go? Further, there is no adoption of Bitcoin in real economy. Steam just dropped it. It is adoption between speculators, but I can't fathom how that could mean less volatility. In fact, it does the opposite

I do not mean from a historical point of view I am speaking from a purely theory based point of view. I do not see the logical connect between prices being higher leading to more volatility in percentage terms. Of course we can look back and see that there is more volatility lately but I think that is because with the increasing price bitcoin are changing hands far more often. If we were to reach a higher price and be relatively stable there I do not see how that would cause more volatility in itself.

Okay, let's speak theory here

If we proceed from the fact that the supply of bitcoins is limited, higher prices may mean less supply provided the coins are being stashed away (which they are). The latter necessarily means that there is no direct relationship between prices and supply (i.e. the higher the price, the higher the supply), which is the case with goods or assets the supply of which can be increased (for example, due to expansion of production). This, in its turn, means that a smaller number of coins can cause stronger price changes or fluctuations, i.e. volatility. In other words, Bitcoin becomes susceptible to sudden bursts of volatility when some whale decides to buy into or cash out of Bitcoin

I thought you have something new to say but this thread is similar to thousands of replies people post in most of the Economics section threads concentrating on the same idea of Demand-Supply with little addition of volatility aspect indeed.
For me, volatility is defined in relative term and that is Percentage. Absolute measure cannot be taken as base for comparing variation in an attribute over two different time period. Now suppose, there are two coins, one worth $1 and other worth $10,000. First varies between $0.2-$5 everyday whereas second varies between $9900-$11000. In absolute term, second coin is indeed fluctuating more than first but still in relative terms (which is general basis of comparison), first coin is more volatile.
So based on above argument, I think High price alone can't mean higher volatility. If percentage change is similar to previous periods,
Volatility is Constant <- Can you feel the pun here :D

Yeah man, High price means high profit and high volatility . It's fairness.

Did you read the thread title?

It reads High prices mean even higher volatility (emphasis added). Do you know what that means or do you have difficulty understanding the meaning? Do you see the difference between high volatility and higher volatility or is it too subtle for you? You may also want to read the OP carefully again (if you read it in the first place) paying particular attention to the terms I used. Since I specifically pointed it out that I mean relative (i.e. percentages) and not absolute changes. Basically, you're not challenging my point, you're challenging your misunderstanding of it

Add also the buyer's confidence and traders emotions into the mix it will be more volatile. The higher prices of Bitcoin will create a stir on people and they will begin to start doubting their decisions on having Bitcoin which can make them be more susceptible on having bad decisions. The higher Bitcoin will get the more panic it will stir when it will correct or when whales will start to offload considerable amount of Bitcoin resulting into massive price decreases.

We should also add one more thing to the "mix"

I didn't investigate into this matter specifically, but if cash-settled Bitcoin futures are allowed, that would add massively to Bitcoin volatility since this is what happens whenever people can trade "paper" whatever (for example, paper gold). Essentially, the introduction of cash-settled futures would make it possible to short Bitcoin to death. Since Bitcoin has no real world use (unlike gold, oil, or whatever), it can be literally shorted to zero (and below)

Definitely but my techniques is i move with the tide market volatility is inevitable so best thing is to over come it by riding the wave..

It is true, but should be a chance that you must be willing to take, since not all who ate i vesting in bitcoin are knowledagble on how investing works, they might be just trying to go along with the the, FOMOs or worst tryin to show others they didn't profit, always take into consideration that people will be impluse buying whenever there will an airdrop that is coming up and will do panic selling whenever they hear a negstve news, and since bitcoin is global, there is a higher volatility rate, just like, since gold is also being traded around the globe.

I think part of what made bitcoin volatility high were the unknown factors. No one could predict how bitcoin's price would respond in the event of a fork. What effect would SEC verdicts on bitcoin ETF's have? There were many unknown variables which caused its price to fluctuate wildly.

As time goes on and variables relating to bitcoin price become greater quantified, we will likely see reduced volatility. Forks won't have as large of an influence on price. SEC announcements and other news which we've seen before will have less of an effect.

With higher bitcoin prices, it could be a good practice to look at percentage shifts rather than quantity of dollars or other btc might be exchanged for. While the dollar amount of price shifts increases as bitcoin's price rises higher, the percentage rates of price shifts appears to be stabilising. Bitcoin is becoming less volatile over time, in terms of percentage shifts, as it becomes a more known phenomena and things like forks are better known and understood with a prior historical precedent.

Bitcoin is not becoming less volatile

Why do you people not read the OP? I mentioned there that Bitcoin is going even more volatile as the price rises. And yes, I mean relative changes, I think in relative changes if you please, i.e. changes in percentages specifically. I've even given an example above which proves that. Now we just need Bitcoin to go down as low as 6-7k dollars to prove me right. Or we could at first surge as high as 25k and then fall back to 10k dollars. This is not because of external factors affecting Bitcoin (though they certainly do). This is due to Bitcoin limited supply and the inverse relationship between Bitcoin supply and its price, most of the time

bringing bitcoin back to a 6-7k dollar price is very unlikely, the more logic it is for people who know the benefits of having bitcoin then they will buy as much bitcoin as possible no matter what price there is if the investor or the bank is in dire need then the price is expensive.

I have seen many people talk about this, and I’m starting to believe it is true. The price has been going up heavily all this while and people has been making lots and lots of profits without loss. I have also seen some say that price will drop soon and from the looks of things, when the price will drop, it will also drop heavily. So higher prices means higher Volatility.

Why is it unlikely?

Is it because you just happen to feel or think it is unlikely? But such feelings and thought can be very deceptive and utterly misleading since this is how market fools most players. Typically, you shouldn't rely on your "gut feelings" when making investments, those who do end up broken eventually. Anyway, let's remember that prices were in that range (6-7k dollars) just a month or so ago. If Bitcoin has risen so fast to so high levels, what would prevent it from falling back to where it started as fast?

In this scenario there would certainly be bigger percentage swings on a less frequent basis (those times you mentioned when a whale sells/buys) but on a daily basis it could suggest the opposite. Given as you said more people would be holding their coins there would be less coins in active circulation and so those trades that do occur will be with a smaller amount of coins and therefore less able to greatly influence the price. I think realistically there are two ways of looking at it and you can't say with certainty that one or the other will happen.

Yes, this is what I mean

In these circumstances, the market will be thin at higher prices, so at first the price should surge to the moon (due to supply running dry) and then, whenever a whale (or two) finally decides to cash out, we will see a monumental crash. Obviously, we are at phase 1 of this cycle and if we see the phase 2, at which the price should go down, say, to 6-7k dollars or below, then my hypothesis will be proved right. We may continue to rise further but this doesn't mean that we won't crash in the end. At least, that's what my theory of a run-away Bitcoin volatility says

Can't say anything right now as BTC High prices may lead to stability also. Right now BTC is in amateur stage as it is gaining more and more popularity now a days so news users are joining every min that mean more volatility but once all the dust settle down I am sure BTC will be quite stable even if its price raises upto $100K

Here are specific arguments for bitcoin becoming less volatile.

#1 Fork announcements and deployments are having a smaller percentage effect on bitcoin price as time goes on. Bitcoin's price is moving less and less everytime news of a new fork emerges. Back in the days of Bitcoin Unlimited and during the first fork known as Bitcoin Cash, BTC's price fluctuated wildly. As time goes on, and we see new forks emerge such as bitcoin gold, we see a less volatile bitcoin.

#2 SEC announcements regarding bitcoin ETF's are having less of an effect on price. Earlier this year, the SEC ruled not to approve a bitcoin ETF. I think that may have had a 10% to 20% effect on bitcoin price. There may have been a second ruling which had a far reduced effect on bitcoin volatility although I'm going purely from memory here.

#3 Criticism of bitcoin from Jamie Dimon and others is having less of an effect on price. I think years ago when Paul Krugman criticized bitcoin it may actually have had an effect on price. Today when Jamie Dimon and economists awarded nobel prizes in their field criticize bitcoin, it appears to have little or no effect.

#4 Events such as china banning bitcoin exchanges is having less of an effect. When china banned bitcoin around 2014 it had a massive effect on bitcoin's value. Compare to 2017 when china banned exchanges once again with a far more limited effect on price.

As time goes on and things like forks are better quantified and better known phenomena. It would appear that bitcoin's value fluctuates less. There is less fear and anxiety from traders and it might be fair to say bitcoin is more stable as a result. Bitcoin becoming more decentralized and evenly spread throughout the world (rather than centralized in china) could also contribute more to stability and lower volatility over time.

There's a generic statement I used here which says: "less of an effect on price". That is to imply a reduced net percentage effect, rather than measured in dollars, euros, rupies, etc.

We have different views here in bitcoin, for me even though bitcoin is not yet used in the stores and other payment transactions, but it is slowly adopt in other transactions also that you never mentioned. We just have to wait for the other companies to accept it. And how can bitcoin volatility can make us kill if this thing can help us in our investments. like buying and selling coins. I have lot of friends succeeded in their bitcoin investment career and even a single regret they never experienced.

I read the other day how the top 1000 bitcoin holders hold something like 40% of all of the bitcoins in circulation. It just shows how a scenario that you speak of is highly possible. At some point in time they will surely liquidate their bitcoin, it won't even have to be a lot of them but say 100000 bitcoin coming in to the market would surely be enough to see the price fall quite dramatically.

The higher its value the more volatile the currency will be, the more so with the BTC where we have a limited amount of money supply. But I believe that such a volatibity is not exclusive to the BTC, if we draw data we will see that several countries went through situations similar to their currencies, many of them came to exchange currency because it reached chaotic level, as was the case in Brazil, due to high inflation and the great volatility they exchanged from the cruise for the real (current currency). What will dictate how great all this volatility will surely be the patrons.

For Bitcoin to use as money and for mainstream retail shops to accept it as a mode of payment for good services its price must stabilize and not volatile. To me me,  the higher price of Bitcoin now is not how important Bitcoin is but speculators pump things up and every crypto currencies lovers should work towards Bitcoin been see as money instead of store of values like stocks and commodities.

I can hardly call these points "arguments"

These are some external factors that affect Bitcoin price, not so much the volatility of it. They may (or may not, for the record) affect volatility as well in some convoluted way, but you have to provide something more substantial that would negate the effect of Bitcoin supply diminishing when prices rise until some whale steps in and cashes out monumentally, thereby crashing the price. Anyway, we can just sit and wait, and if the prices stay at their current level for a few months give or take a few thousand dollars, then my theory doesn't hold


Why don't you get I mean exactly that? That is, volatility measured in percentages of the price?


Yeah, I read that piece too

The market demand and supply is what causes the prices to fluctuate, volatility gets higher or lesser depending upon circumstances, in layman's terms. The volatility of the price can be the same or higher or lower, it's mostly determined on the reason for the price rise and that's how it usually works right? Or am I totally dumb and saying bull shit here? Enlighten me then. But.. Volatility can also be dependent upon on elasticity of demand and supply. Elasticity basically means the degree of responsiveness to demand or supply due to change in price. And evaluating the factors affecting these elasticity of demand and supply the answer to the question of OP can be answered.

So, I was looking at the yearly bitcoin volatility chart. I would suggest you to go through it once. Volatility is varying highly with external demand than increasing price. The maximum volatility of the year was during April-May when there was an excess demand from Japan. After that volatility remained quite medium as there was demand but not excess, but price was increasing meanwhile. And now when there is again an overall hike in demand globally, volatility is high.

in the month of December, the value of bitcoin rose very drastically. you are more understanding and always observe volatility chart, does this mean volatility in this month is high enough? when you said, the maximum volatility is in April-May.

It was highest in April-May. But is still high in December too because there is global excess demand. Some new major market like India is emerging bringing in more demand.

Good point. I think that maybe volatility can't be considered to have a strong connection with the price. It's just like altcoins and bitcoin. Some say that when btc is up alts are down, others say the opposite. If we look at the charts then it's sometimes the first way and other times - the second.
The only sort of obvious thing is that when the capitalization grows, the harder it becomes to manipulate the price. So, the flaws become more .. natural, they reflect the general will of people and their attitude to btc.

No it’s not like that. All physical currencies like Gold, Crude oil, USD are not that volatile even their prices become high. This formula is applicable only for bitcoin cryptocurrency. Price and volatility is determined by the flow of demand and supply. In case of bitcoin demand is unlimited and is ever-growing. But supply is restricted to 21 million bitcoins. As a result volatility is increasing. In case of centralised currencies, when volatility rises Bank, Government or Central authority interferes and manages the demand. Bitcoin is a decentralised currency so this option is not applicable. So as the demand will increase so will the price and the volatility?

I think I agree with this point of view because even the fiat that the comparison is being against bitcoin would have been more volatile than bitcoin if the government had allowed the free flow of demand and supply without interfering in the market. Today we go to the store to buy goods and expect it to be the same price we bought it last week or last month and even if we expect and increase, maybe some cents or dollars which is bearable all this didn't happen by magic but because of the agents of government regulating the activities of the market and the capitalist within the system.

People by default are greedy and when it comes to bitcoin, its just because nobody is regulating it, that is why so much volatility is being witnessed. Even in the stock market, prices don't move this way but to me, its a mixture of both the good and the bad.

I don't think so, it is right to say that "High price will lead to high volatility" in fact sudden increase or decrease in its value can be termed as high volatility and also if price is rising at continuous and slow pace then it is definitely not stepping towards high volatility. I think as the price increases it is is divided among larger population and which will eventually lead to low volatility as price will not be driven by smaller group. When coin value is limited to less users it can be subject to high volatility easily. 

Well, Bitcoin has just crashed below 12,000 dollars per coin after reaching the 20,000 dollar mark just a week or so ago, and I won't be surprised if it dips below 10k dollars by the end of the day. Right now the decline is already over 40% (the lowest price today was below the 11,600 mark, just in case). And it seems that we haven't seen so dramatic price fall for long (since 2015 if I'm not mistaken). So, does anyone want to challenge my high price means higher volatility mega theory now or what?

I'm all ears mates


It's already crashed below 11,000 dollars

if to my knowledge, the contest on the market every demand down then the price will rise, while the demand will rise, the possibility of bitcoin strategy also be like that, because during this time the demand for bitcoin more and more.
to the extent that the government can not know anyone who uses bitcoin.

Hi,

You are right, indeed.
Still, the volatility of bitcoin is an important issue.

Specialists, economists and so on, are right when they say that bitcoin cannot be a real currency as long as it is so volatile. Just because you can't have the costs of your daily shopping increase by 1000% within a year or change drastically every couple of hours.

Any idea about how to stabilize it?

For example, if you own options when implied volatility increases, the price of these options climbs higher. A change in implied volatility for the worse can create losses, however, even when you are right about the stock's ...
But a high volatility in the price of an underlying also means that there is a higher chance that the underlying price ... So even though there is a possibility of prices falling, you wouldn't mind paying higher premiums in a volatile ...

So you think that If the price is rising slowly then it will be less volatile than if it is rising rapidly?
The price volatility doesn't depend on rapid or gradual growth, the thing that matters is the demand with respect to the supply. The supply is same and demand is increasing rapidly so the manipulators (whales that owns hundreds of bitcoins)present in the market have more affect on the price.
Did you observe the recent price dips of more than around $2000-4000 in few hours after the price crosses $12K? And even today it falls below $11k from $16K which was at $19.6K three days back.

To me, there is no way to stabilize it. It's the market, how can you do this? To make it more stable, you need more market participants and more investors to make a homogenous environment in the market. That's it.

For me demand is the most important thing because it will affect the price of Bitcoin very quickly and also easily. I acknowledge that things like this have to be on guard because if demand decreases then it proves that people's trust in Bitcoin has begun to decline. But if the price of Bitcoin can increase then we can ensure that the demand for Bitcoin is on the rise and this has proved that Bitcoin is on a positive track.

There is no need to stabilize Bitcoin

I mean there's no need for any special measures. In fact, it is pretty easy to get rid of volatility by hedging, and I guess this is what most payment processors like BitPay do anyway. The point is we need instantly fast and dirty cheap transactions. Further, if Bitcoin (or any other coin, for that matter) gets widespread use in the real economy (which is impossible without fast and cheap transactions), its price will stabilize all by itself. For example, why the US dollar is so stable? Because it is used everywhere, and then the constant value of goods which you can buy with the dollar kicks in and extinguishes all serious price fluctuations and volatility

This is true, when bitcoin dropped by more than 40% a few months ago it was nothing.
I mean, a 40% of 2000$ was just $4000, and it did crashed by that amount on July.
But now it crashed from 40% and it went from $20k to $11k, in fact, it is the same percentage, but everybody is complaning that this is the massive crash that all the shorters were expecting to see.

I agree with you to some extent that higher price leads to higher volatility as volatility even comes after certain time of period like it starts after sideways market ends where the volatility is low during sideways market and at that time supply and demand are dried up and slowly it increases with increase in volatility and rise in prices.

If you watched the charts i'm sure you've noticed that the jump between 17 and 20K USD was on low volume. The price was never really there. If you don't get it i'll explain.
If you have very little orders on exchanges and not many people willing to sell at given prices you can put up a buy order of 1 BTC and move the price up by 100 USD, simply because there are no orders at certain price range. People saw a very fast increase and set up for sale at the level of $20k with very little orders between 100 and 20. So the price  went there in numbers but only a very small group of people did the trading. If that happens you usually also need a very small amount of coins to push the price down and this is exactly what happened. The real trading starts much lower and you can see it's taking more and more time to push the price through the support levels. Every $1000 down takes much more time than it did to dump the first 3k. It's all normal, but you see it like something huge and keep asking "damn it went down by $5k already what's going on?"

I guess you should read the OP again

Since this is what I'm telling myself. So let me quote that part for you (emphasis added):


As you can see, low volume that you speak of is what I call market thinning (well, this is actually an established term). In fact, that's what inexorably happens when there is only limited supply of anything (like Bitcoin, for example). When the price rises in these circumstances, the orderbooks become shallow with no volume. That's basically the reason behind the likely surge in volatility which is about to happen. Thus the market becomes highly susceptible to sell orders which otherwise wouldn't send the price down so much so fast. Hope this helps

I think it really depends on the trading volume. I do not deny that right now the volatility is really high

this situation could have been predicted for a long time and many Bitcoin users have been waiting for this opportunity for a long time to actually buy Bitcoin by Price for 40 or 30% cheaper. Just think, that from the New Year these investments can double.

This is the topic to be discussed on this forum with seriousness. Actually you are right to an extent that what if something have so low price one day and then the other day bitcoins’ prices are getting higher and you see the price of that thing just get double or triple. So yes, till this price volatility comes to an end or it converted to stability, this can’t be a national or legal currency.

I also think that there is no reason for worry. The price of bitcoin is constantly changing. I believe that the price will rise in the near future

https://www.buybitcoinworldwide.com/volatility-index/

Historical data clearly shows that Bitcoin's volatility index was at the highest during early days, when the price was low. The second chart has log scale for price, which is also pretty good for comparing volatility when zoomed out. So, volatility has increased a bit comparing with the last year, but still nowhere near as high as it was during early days. Your theory might correctly predict or explain volatility in some few cases, but it's going to be wrong in the long run.

Evidently, you don't see the forest for the trees

Basically, are you going to say that Bitcoin volatility will decrease when prices surge further, say, over 30,000 dollars and what (provided they ever do, of course)? You, like other people, seem to forget that earlier days of Bitcoin are irrelevant since there was tremendous supply of new coins each day, week after week, relative to the total amount of coins mined till then. I have explained in my OP that this theory works when the supply is limited as is what we have by now when the supply of new coins is mostly negligible. This is the main cause why volatility is set to prevail over prices in the long run specifically

Trading volume is an important factor, it is also the decisive factor of the fluctuation of a currency. The value of a currency does not affect its fluctuations; conversely, its value depends heavily on its fluctuations.

I agree with you when any altcoin is worth the higher then of course the risk of evaporation is higher. So when the higher the value of the market fluctuations, bitcoin greatly affect the crypto market.

If bitcoin price is high. Thats good lot of profit we will gain. Bitcoin is volatile we wont pridect if the price will go up or down. Bitcoin is the numver one interms of digital currency its value will increase and increase if it is more people used it
 

Trading volume and the thickness of an order book are pretty much the main factors in volatility. Some coins that trade at 100 satoshi have much higher volatility than others at 0.01 BTC.

Thank you for this subtle analysis which is exactly the way we just need to start seeing things when the price just went on the increase within a few days a lot of people wanted answers but still don't want the right answers. Its all about the forces of demand and supply rather than blaming the whales for everything. The price tanked, a lot of people panicked, which then led to a further crash of price now we can have something to talk about than the issues of fees.

Now it's time to resurrect this thread

Ultimately, it all comes down to the balance of supply and demand, but it is the forces working behind them which are actually interesting. So I am utterly curious, first, whether someone still doubts it is some of the whales behind this price collapse (since this is what my hypothesis basically hinges on), and, second, if there is still anyone who is going to challenge the idea presented in this thread. Also, I would like some dude to come here and explain in the open where all many million dollars allegedly waiting in the orderbooks for cheap bitcoins disappeared:


So where's the money that should have made market more stable?

Well, it's been over two years after the last resurrection of this thread

Today's prices are half of what they were in December 2017 when this thread had been started. A lot changed since then, but volatility is stable, no matter how ironic or oxymoronic it sounds. So I'm curious once more if someone is seriously going to challenge the point that Bitcoin volatility cannot be expected to subside in due course? I'm not already speaking about volatility running ahead of prices like 20-50-100k dollars per coin. Meanwhile, it has rather become a question of whether volatility is not going to continue notching up on its own within the established yearly range of price action, i.e. 4-14k (give or take) as years slowly go by

Having high fluctuations means that Bitcoin will not be able to achieve the main thing that it was created for. People will just understand it as an asset they could buy and make money in return. But, none of us will say something about that because we like to make money from the asset and that's it, when it goes down everybody starts running from it. And you're right, when more money goes into the market the price goes up high and eventually they will still withdraw these money and the price will still comes crashing again. It's just how it's been and you can't really change anything about it.

Moreover, when bitcoin was trading around $1k and now trading around $10k , it is always fluctuating in same percentage. Usually +/-5% to 10%. It means when it was around $1k, it moved ups down for $50 to $100 and now even $500/$1000 movements are most common. So, higher price tends to higher volatility as per basics.

Bitcoin is a very lucrative currency to invest in As the demand for Bitcoin increases so will its price Prices fluctuate depending on the situation in the market but so far Bitcoin has not been affected by the virus, but the demand for Bitcoin is increasing due to the virus and reaching higher positions. The front has the potential to rise further Due to the high price most traders invest in Bitcoin to make money.

There are factors that really affect the volatility and intensity of changes in price of bitcoin, just like the stock market and other economic factors.

High volatility can make highs and lows in improvement of bitcoin's price, you just need to deal with it in order to achieve your goal in making a cryptocurrency as your asset.Just don't be so affected if the bitcoin's price become low, hope for its improvement and believe on its ability that it will increase its price in a certain time.

When you know that price of bitcoin will increase higher then you should be careful because there is probably a huge drop in its price after that.

As per thread title, high prices mean even higher volatility (emphasis added)

So it is about volatility going up with prices rising. Since volatility is usually measured in relative terms (think variance here), higher volatility at higher prices means greater price swings in percentages as well. At first I thought that this dynamic was going to reveal itself at prices exceeding 20k (like 50-100k price range). However, as it turns out now, the same dynamic is happening even at lower prices. We saw the price easily crash to 4k and then rebound to 10k in a matter of couple months, with the implication being that we are still likely to see increasing volatility even without the price rising as such

It still depends, high prices can still increase and it depends on you if you will settle with that certain price or you will risks the chance of getting much higher price. That's how volatility of bitcoin works, it is not that certain on when we will sell our bitcoin especially that it can occur some changes in its price. That's why as soon as possible we need to always check the price of bitcoin in the market and check for those possible factors that can trigger its volatility. Sometimes we need to become more conscious about our assets so that we can manipulate it properly and earn more profits than losses. There are a lot of economic factors that can contribute to the changes in the price of bitcoin from time to time.

High prices would mean more stability for one simple reason. It would take a lot more money to move it to begin with. When the price is let's say 100 thousand dollars per bitcoin, if it is already there that means there was a ton of people that sold beforehand and not many early birds are left that bought from very cheap, you also can't buy in bulk neither because buying in bulk would mean tens of millions of dollars at least and probably hundreds of millions of dollars.

So, when you get rid of those early buyers until the 100k price that means the price would be more stable with significant amount of money required to move it to begin with. Sure it could be easier since there is no regulations and it could move however it wants but I do not see that much money changing hands that quickly and easily.

The dow jones, as it got bigger resulted in lower volatility. As things get bigger it takes more money to move them.

There's definitely certain influence of the stock market as well as impact of other external factors

Or rather, the factors that affect the stock market are also affecting cryptocurrency. It would be unwise bordering on naïve to ignore them. However, this is not what is at play here. Bitcoin is inherently volatile due to its deflationary nature (hard-capped supply and people hoarding it). It could even be said its volatility is a function of time as more and more bitcoins get stashed away. You would expect prices to rise under such circumstances, and they do. But volatility still runs ahead, thus it is not so much prices that are rising but volatility surging

Based on my experienced while doing trade move higher volatility when the price go up because the demand increasing at the same time but be careful when the price go up because it will go down drastically,that's why always watch your buy and sell order to make sure that you will make profit and avoid loses. Those higher volatility is also a chance to earn if you know how to play with it.

Mate, you are almost 3 years late

Obviously, you are not the first who came up with this idea. It could have sounded plausible in early December, 2017, when we were yet to reach 20k. But now we have half that price, even less than that, which kinda contradicts such logic. Speaking more generally, if this assumption were true, the price would always have less resistance to go up than to go down, which would lead to ever growing prices. However, reality seems to be quite different, and at higher prices in case of Bitcoin, the market becomes thin which leads to bursts of volatility, as per OP


Yeah, right. I remember that argument about millions of dollars sitting in the orderbooks. Sorry, it didn't work out

It's best to work with limit orders so you don't sell by mistake a quick downturn.

But who knows what the real price for 1 Bitcoin is? Since there is a fixed supply we can only speculate about the price. Also with inflation and expansionary monetary policies the price for bitcoin is only up. With a higher price bitcoin doesn't not need to be more volatile - if the price would be rising constantly for a year, the volatility would be very small - just avoid panic sells.

That's right, you always need to be aware about the sudden drop it bitcoin price once the market experience collapses. It is not that hard to make your self stop from doing transactions once the volatility of bitcoin occur, as the bitcoin price increases, that's not the best thing that you should focus on. You also need to know how long it will lasts so as soon as possible, you can prevent losses once you see its price changes. Cryptocurrencies really have that kind of ability to expand its volatility depending on the market volume and demand. Huge drops will always come so you need to also prepare and be ready for that so that you will not have a hard time to recover all your losses due to its volatility.

Most people know about the volatility, but the biggest problem in this matter is they have greediness, which prevents them from stopping trading or they don't sell their bitcoin once the price increase so high. They always want to make more and more profit, and it seems they forgot that the high price would not stay in there, and there will be a time for the price to go down and make a correction. The volatility helps us make the profit, but that doesn't mean we don't need to close the trading at the highest price because we need to save the money that we use to trade and take those profits as much as we can. We can wait for more for the low price to buy back bitcoin again at a low price.

thats us we love money thats why we keep on pushing our luck into the highest level  . its fine as long as you are willing to loose your capital but its not good if you will regret and cry  on the end . i saw many people complain that they made a high money from x capital    .  i cant imagine my self not stopping or withdrawing once i already earned some profits   .  i know the risk is high when prices is increasing because volatility is also high knowing that people are also selling fast 

Volatility is what we liked in cryptocurrency because it help us make profit.The higher the price the better to sell but we need to closed the trade or else we lose instead of profit. Being greedy won't help us to gain specially when the price is higher because there is also a high possibilities that the price will go down drastically.

We need to get out after we make a profit because we can not expect to make more profit if we stay for more. We know the risk is high, and that is why we need to know when we need to stay or when we need to take profit. People complain about why they can not make more profit, and they still waiting for more, but the fact is they can not even make a profit. I always try to withdrawing the profit, no matter if that is a small profit because I know that everything will start from small, and soon, that will become bigger.

I think high prices do not create high volatility because the price is not important for high volatility to occur. Of course, since volatile trading pairs will have price changes, the transaction volume will increase gradually, but I think that this increase will not occur due to high prices and the users who want to gain from volatility formed there will provide this increase. In other words, I do not think that high price can also cause high volatility as a product is likely to be volatile under all conditions regardless of price.

You don't want to say that volatility will stay the same at 100k as it is now with prices below 10k, do you? Indeed, I don't mean absolute values (as in dollars) but relative terms (as in percentages). When the price rose to 20k, did it stay there? Nope, and far from that. Or did it stay above 15k for long, both on the way up and on the way down? Not in the least

But that's it, volatility as it is

IMO, the high price proves that the product of a project really has a very useful function. however, high prices prove that many people are using it, and need it. other than that, price reductions that might occur make people think that they are low prices. however, a high price does not mean that it has a high volatile. it depends on your needs and requests.

I agree, many say that YFI is a substitute for bitcoin simply because the price exceeds the price of bitcoin, even though the daily volume is still very small when compared to bitcoin.people only see the price even though there is no trading volume that occurs on a coin they still think that it is high volatility.
I think the volatility is when the volume of a coin exceeds half of its market cap for the assumption that if TRX has a market cap of 2.4B then a daily volume of more than 1B is considered high volatility even though the TRX price is only 0.03 $.

I get what you’re talking about here, and seems he’s not really understanding. What you’re trying to say is that there are people who are holding a lot of bitcoins and when the price starts increasing , these people will then be holding huge amount of money in their wallet as the worth of the coins they bought have increased to a higher amount.

So, this means that these would be regarded as whales at this level, and as such if they should dump the coins they are holding in the market, it’s going to affect the market real big and the price will decrease. But, I think for Bitcoin we are getting passed that level, since the market cap is huge now, altcoins are the ones that are likely to experience such thing the more.

That's correct. But it's only one small detail of the much bigger picture


That's an illusion

The market cap is useless, no matter how huge it is. In fact, the bigger it gets, the less useful, or more harmful, it becomes. What actually matters is liquidity, and in terms of Bitcoin prices, it comes down to how many dollars are willing to buy how many bitcoins at current prices. And the point is, the higher the price, the less liquidity will be in the market, despite the market cap shooting through the roof. There's no way to get around this

This is it (most likely). Enjoy the ride

See I try to understand that irrespective the higher price of cryptocurrency especially bitcoin in particular and falling of it many people still benefit from it, so even now many people mindset is to ensure that bitcoin keep on going up, but from my perspective I don't think out hundred percent (100%) in forum knows while bitcoin normally raise and the major causes of bitcoin falling, so it's unknown for we to debate such, everyone who invest in bitcoin is making profit now only.

High prices and high volatility are much related to one another. Because BTC has the feature of volatility. When it's the increases then there are guaranteed to stay for a long time. It can be collapse anytime so these two things depend on their own. Maximum time prices grow up and then it falls in a scam it is riskier. 

That is the difference people have with the amount and the % deals. For example let's say you bought bitcoin from 10k, and it dropped to 8k, that would be a 20% fall and you would lose 2k per bitcoin right? That is just 2 thousand dollars and even though it is bad you could hold on and wait for it to go back above 10k which looks quite "close" because it is only 2 thousand dollars.

However reality is that when the price is 40 thousand dollars and drops to 32 thousand dollars, that is still a 20% fall, but this time around it is 8 thousand dollars instead of 2, and that makes people question what is going to happen next since they think it is harder to go up 8k versus 2k but it is still the 20% difference anyway so why should it be any different. Sure it requires more buys, but there is more money in the market anyway so it shouldn't really be too different if you ask me.

The fact that the price volatility of bitcoin is capable of increasing with an increase in its price can be seen even in the example of the last rise in the price of bitcoin to $ 40,000. On January 10, the bitcoin price exceeded $ 40,000, and the very next day, on January 11, it dropped to $ 31,000, on January 12, it rose above $ 36,000. If you look at the CoinMarketCap table at this time, the price of bitcoin just jumped up and down by hundreds of dollars every few seconds. Previously, when its price was lower, such high volatility was not observed. You can imagine how its price will sometimes jump when it reaches a hundred thousand dollars or more.

That's what the theory says

Both the rise and the fall are driven by institutional money going in and out of the market. Simple folks don't actively sell but they still accumulate religiously on pullbacks. This leads to an ever decreasing supply side because the number of bitcoins cannot significantly increase as there are only so many bitcoins (as opposed to, for example, gold, which supply is elastic). As a result, volatility is set to outrun the rise in prices, and this is exactly what we see happening right now. Eventually, the Bitcoin Big Rip (https://bitcointalk.org/index.php?topic=1736634.0) event should occur (at least hypothetically)

The increase in bitcoin price has so far been uncontrollable so that the price is very volatile, which in turn causes high volatility. Of course the OP has understood enough about this.
Fluctuation is an inseparable part of bitcoin because that is how trader profit. But I am pretty sure that bitcoin is currently experiencing high price volatility due to market trends. The 12% increase in the last 24 hours is what I mean.

I would be interested to hear your opinion of how you present the controlled growth of prices in bitcoin ;) Bitcoin is at the upper border of the price range right now and few in the market represents real movement in the future, so volatility is inevitable and any news can set the price to the skies and organize the hard drawdown of foreign exchange rates. It seems that a correction occurred a week ago, and now we are again approaching the upper limits.

It will becoming more volatile once bitcoin supply move a little like people buying or selling since almost all supply had been already liquidated then bitcoin market price will be greatly affected. Well, this is actually good for the day traders. But I would not be suggesting to any newbie wanted to become a day trader because bitcoin market price prediction is very difficult to predict. However, others are earning in day trading due to the fact that they are having bots working for them to trade automatically for them.

I agree and I think this is the normal market cycle of every market performance in which this is not only happening in Crypto particularly Bitcoin market but also in other trading industries too like stocks exchange. Even do we choose to invest in blue chips but still after the price moving upward it will surely going down as there is no history that a certain market is steadily going up.

Right now it is the institutions that are mopping up whatever supply there is in the market. And since these institutions have just made their investment, we can expect them to hold on to their coins at least for the next 12-18 months. A lot of the individual users are also holding on to their coins, as they are targeting six-digit exchange rates. Obviously this will lead to a decline in trade volumes, and the liquidity will decline as a result.

Higher prices means huge market cap to give support to its backbone. In this case bitcoin is invested by small to big companies and individuals as well. This forms the so called backbone for it and thus its prices are defined based on that.

Does this affect volatility? Yes of course it does because we are completely relying on this mega investors and if they wish they could take out their money off the market anytime and disturb the prices thus turning it into bitcoins volatility. 

High prices are not only the forerunners of high volatility but also high inflation. So volatility at high prices is quite a working mechanism for auto-correction of goods and prices for them. If [something]  is unreasonably expensive, then it has a very large chance to go bankrupt/close/collapse its price simply because the supply will not be conditioned by demand. Thus, inflation is not accelerated to super-indicators by printing money as an attempt to ensure high prices.
And when this mechanism fails, you get Venezuela.
There is an unpopular opinion (mine) that after reaching a certain price level (high enough), BTC and any other expensive coin can collapse to the bottom simply because this price will become unreasonably high. And that's good. Thus, people will finally understand that earn fiat from cryptocurrencies is not why they exist.

Interesting to read this long-duration thread over the years at this point. I think I was skeptical of the idea 3 years ago, but I think the general thesis has borne out pretty well over this most recent run up in the price, and I think the institutional investors moving in really illustrate well the effect it has on the price and the crunch on the supply side driving volatility.

What do you mean by "to the bottom?" Are you suggesting BTC, like tulips, will one day pop the bubble of all bubbles, and then collapse to ~$0?

We all know parabolic increases are unsustainable. That's just common sense. 2011, 2013, and 2017 all come to mind. But the bear market bottoms are always higher lows. Are you suggesting that will change?


Every bear market shakes out the "get rich quick" speculators and teaches them that lesson. Underlying all the hype and speculation is a robust, useful, secure network that's growing larger everyday. And that's why it always recovers stronger than before.

Its true. Bitcoins higher prices now causes higher volatility and brought much intense emotions to every individual in crypto world. And I guess, its just normal in the digital market that we must be ready anytime. After all, I believe that we are all aware that Bitcoins and other crypto currencies are naturally volatile and when the prices go up higher, the volatility will be more triggered.

I don't think we will ever live up to that (the Big Rip situation)

The price itself is not important. You can just as easily say that Bitcoin is already a staggering 3 million dollars per 100 bitcoins or measly 0.0003 dollar per 1 satoshi, and both ideas would be correct. What matters here is when volatility becomes so high that we can no longer speak of a price metric as such (aka Big Rip)

However, it still seems to be a purely hypothetical construct as volatility would likely turn out self-limiting at the end of the day, but that doesn't mean prices crashing into the ground. In other words, we should rather end up with an equilibrium in volatility, and that would ultimately determine the price. It's important to clearly see the causal chain here

I would say that its just due to the nature of bitcoin, and the moderately-high volatility that it brings with it. And, that's not counting the corrects, i.e., when the price is riding a short-term bull run, like it did end-2020-new years of 2021, reaching an ATH of ~41K USD, but then it corrected itself to a more stable price of $32-34K USD (currently). In these kind of short term bull runs, the market is very likely to flip, as the consensus becomes that the risk of trading higher might cause losses.

Changes like that often occur, I've seen it in 2017-18 too, but there's very little to none chance that bitcoin suddenly flops down to $0 and crashes into the ground- that's just not happening as long as there is a healthy growing community of users who having faith and HODLing BTC.

The higher volatility we see right now is more short term in my opinion. Due to the high bitcoin price there are probably quite a few investors who want to realise their gains and will less their coins resulting in a moderate price drop. Once all these investors dumped their coins the prices should stabilise again. As most investors are long term holders of their coins and will hold on to them.

It is actually the other way around. The longer timeframe you look at, the more volatile and unstable the price will be. Put differently, Bitcoin can only be considered stable (read, less volatile) on a very short timeframe like a day or two (see the price dynamic from 2017 till now). If anything, Bitcoin is a paragon of instability (or anything but a paragon of stability)


The limited supply of new bitcoins makes it impossible in the long run. As liquidity constantly shrinks (i.e. the number of available coins diminishes), a greater number of small-time holders are now able to affect the price big-time. So it is a never ending process at higher prices and the primary driver of volatility as it requires less and less money, both fiat and crypto, to move the price either way. We had started to see these effects even at 10k when the price stayed there for too long. It is just a huge inflow of institutional money that pushed the prices to their current levels, and probably specifically because of this (low supply). But the pattern is not going anywhere, and it has started to reveal itself all over again

In simple terms, expect more to come

That is my guess as well. One thing I have noticed is that there is a liquidity crunch right now, mostly affecting the smaller exchanges. The larger exchanges are doing fine, but in due course they will also face issues in maintaining the liquidity. Actually this process started a long time back, after the third bock reward halving. However, the impact was not immediately visible due to the excess supply. Now that excess supply has evaporated and demand is outstripping the supply.

There seems to be (have been) another factor at play here, that of altcoins. The last few weeks altcoins have been performing a lot better than the Godfather cryptocurrency, and folks were feverishly selling into the Bitcoin support (while it was there) so that they could get the dough to join the altcoin rally

Then it backfired massively

https://i.imgur.com/YrpZ2dW.jpg

Remember, every bullrun ends with a bulltrap

All my friends who got into the crypto game by altcoins, also own Bitcoin. No exception. So the 'altcoin retail' is definitely a factor for BTC's liquidity as well. Besides that, liquidity providers do their part, and don't forget institutional entities are also getting more and more into asset classes like lending, for example, using both DeFi and CeFi. "The lack of liquidity also creates arbitrage opportunities, for example, if different crypto exchanges have different liquidity levels. Crypto lending provides liquidity to institutional investors such as hedge funds, crypto exchanges, or market makers, allowing them to exploit these arbitrage opportunities." (source https://www.cryptostudio.com/lending-abc/market/) so it's definitely interesting to see how official/gov entities and institutional investors are adapting in the next weeks and months, for sure, combined with all the retail acceptance...

I would sort of agree with you but that's going a bit too far isn't it? I mean by the logic of the image we could say that there is a tramboline or something which is a huuuuge one where every bull falls waaaaaaaayyy down and then they fall to the trampoline and jump back up. I am not saying we will never have a crash, it could happen, you could see the start of a huge bear run right now that sees bitcoin going all the way down under 30k, all of these could happen, I can't argue against it.

However we can't say that it is the end of it all, it is just a crash and just like every other crash we had so far I am sure that it will result with another bull run, maybe in 6 months, maybe in a year, or maybe 3 years but I am sure that eventually we will go back over 64k guaranteed, it may not be right away, it may take years but that will happen. This is why the image is sort of wrong, it represents basically an end, this is just the road, we go up and we go down.

When the bullrun is fueled by borrowed money, it kinda is. That's the whole idea behind a bulltrap as otherwise everyone could simply ride it out

if I think in crypto anything can happen. Indeed, the above statement is not wrong, after we experience bullrun, it ends with a bull trap. we know very large volatile, with large price corrections as well. but in me bitcoin will continue to rise and form new peaks, even though a major correction occurred

An increase in the price of a decentralized cryptocurrency may not be noticeable for an increase in volatility in terms of percentage ratios, but if you just look at the price of a cryptocurrency, which is what most of the participants in this market are interested in, it is very noticeable. With the relatively high current price values ​​of bitcoin, we see that during the day its price can change by several thousand dollars, and very few people even pay attention to this. However, if bitcoin had a price of about ten thousand dollars, then this would be very significant and noticeable.

Trading volume = volatility.  it can be manipulated.  that's what I know.  as long as there are buys and sells it will be trading volume.  but with high volatility, it guarantees that the market is crowded, like the law of economics, if the market is crowded then the goods are in high demand, the opportunity to get a bigger profit.  but is it manipulation or real?  fortunately with the Blockchain system we can check it.  who plays the price and who is involved.  so we better be more careful

You can check the source of the volatility as much as you want, but this does not negate the volatility itself. Any normal market has volatility, but high trading volumes also do not necessarily serve as a source of high volatility, because much depends on the structure of the market and short-term high volatility can be replaced by long-term periods of relative market stability. However, it is quite clear that a very rapid price increase is indeed fraught with high volatility, when this growth is not supported by underlying factors.

Well for me I think there is actually nothing here to argue about, obviously the guy is blindly agueing with you because we all know the higher the prices the higher volatility, once prices goes way too high the correction might bring a massive downtrend. Check out when bitcoin was at 9k in 2020 and the pandemic came which made bitcoin fell to about 4k usd  we can possibly say the deep is high but not as high as bitcoin falling from 64K to 32k in this present time, this alone shows the higher the prices the higher the volatility.

I see how it seems obvious now

It's definitely easy to be wise in hindsight. However, it's only the so-called recency bias playing its dirty tricks on us and distorting our judgment. As the posts above clearly demonstrate, whenever the price stays put for some time, people are more and more inclined to think that it will go on, or stay, like that in the future. While in reality, it is the exact opposite. The longer the price stays in a tight range, the stronger the subsequent price action will be

That's cause the people in the market is likely to sell their bitcoin when they know that they are going to get a really big profit and we can't blame them, some have been a long time hodlers and some are too eager to sell because they find it hard to believe their capital grew at a really fast pace.

Well that will make the market move at least but does not enough to make the price that volatile , We are talking about small investors here but what we are not looking about those big fish.
the whales that makes the market very volatile because just 2 or 3 of them will Sell or Buy surely the market will shake and the volatile may shown.
Only if you know how to ride and when to ride, that is the benefit of those High paid Signals , at some point they seems to know when this will happen.

Of course, despite the fact that many deny this obvious truth, it is already becoming a reality. When Bitcoin climbed to $ 20,000 in December 2017, it dropped to $ 6,000 the following year. This year, it has risen to $ 64,000 and dropped to $ 30,000. If you do not take into account the percentage, but only the real numbers, then in the first case, bitcoin fell by $ 12,000, in the second by $ 34,000. The difference is explained only by the fact that in the second case, the price of bitcoin has risen much higher. If bitcoin continues to grow in price, then it is obvious that its price drop will no longer be tens, but hundreds of thousands of dollars.