Bitcoin Forum

What are your opinions about it? I read this article recently about https://moneyinvestors.net/cryptocurrencies/why-is-bitcoin-so-volatile-4-fundamental-reasons/ (https://moneyinvestors.net/cryptocurrencies/why-is-bitcoin-so-volatile-4-fundamental-reasons/) do you agree with these 4 fundamental reasons?

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Know this, bitcoin is becoming less and less volatile as time goes on.
Options trading is unlimited. And there are a lot of big whales who can move the small developing market that is crypto currency.

At least when making a post, you should outline your points first even before going ahead to put your reference link. Not everyone has the energy to go over your link reading all that.
From the  article, the four fundamental reason were;
 1: lack of regulation
 2: magic of supply and demand
 3: a technology still in evolution
 4: world conflict

From the first point, there are other volatile regulated  crypto not only Bitcoin. To make an investment you must understand the risk and agree to it.
 Point two, the demand of Bitcoin is already high so I agree to point four, world conflict can cause entire market volatility not only Bitcoin, example was during the COVID-19 pandemic the crypto market was really bad.

Bitcoin is highly volatile basically because there are too many coins in very few hands. It allows market manipulation by whales in high intensity.

If those whales didn't have so many coins and those coins were splitted among more hands (more investors), bitcoin's volatility would decrease considerably.

On the practice, it means few individuals could sell their chuncks of bitcoin, but it wouldn't have a big price impact at first point, moreover it wouldn't lead to panic or mass selling by other investors like we still see nowadays.

Even if the market is regulated all around we'll have the similar level of volatility. Maybe I'm wrong, but this is what I believe based on the technology that backs bitcoin. The supply and demand have got its role, beyond that is the Influencers. In recent days the market is into the hands of Influencers who had the ability to move the market, just because it is speculative by development. So, based on the scenario different parameters make the market volatile.

We can't indicate specific things as the reason for market volatility, if so the decisions from governments, influencers, positive/negative things relative to the cryptocurrency, etc can also be added to the list.

I personally can agree with the 4 reasons listed in the article. But these four reasons will also not last forever because they still have the potential to change again in the future when the world conflict is over and regulation for Bitcoin begins to exist. Because two of the four listed reasons can still change when all the good things are in Bitcoin.

Those are basic reasons about the volatility factor in crypto.
Up until now, crypto market is still in the speculative form of market.
Hence, many users are being attracted into this market for the purpose of possible high profits.
Also, there may be other factors influencing this market, but most of the time, it is the combination of those factors why we are seeing the price movement.

Thanks for putting it here, lol.
Among the list, I am more hooked on the lack of regulation, that's why it is also volatile for example, there is some news that affects negative Bitcoin and the price will get affected in just a short period of time, because you see that Bitcoin market is 24/7, anything can happen anytime.

All markets experience volatility, Bitcoin is no different.

actually the more volatile the bitcoin price, the greater the risk we take if we decide to invest in bitcoin (but actually, the higher the potential profit we will get).

for bitcoin fluctuations themselves are influenced by many factors such as.
news of new regulations or actions from banks and governments.
statements from leading figures in technology and investment.
news hacking or security breach
rumors or misinformation.
and these are just some of the factors that affect the price movement of cryptocurrencies such as bitcoin because there are many other factors that influence it.

I think points number 1 and 4 are the ones that have the most impact so that bitcoin becomes very volatile, there is no regulation on prices so people who have power can make the price go up or even down with the money they have as well as world conflict because of the conditions erratic will create a lot of good and bad news that will affect so that it has a huge impact on the price of BTC and becomes very volatile, but that's what most people like because the volatility of BTC makes a lot of people profit, especially speculators

People seem to think that whales are just people. Actually they are mostly institutions with a lot of coins on the market, and these are what usually bring down or shoot up the prices. The bull rally in 2021 and subsequent crash this year were both largely due to institutional whales.

The main reason for me why bitcoin is very volatile is its scarcity. As years pass, many countries acknowledge that cryptocurrencies especially bitcoin can help a lot in our financial system so countries that want to accumulate a huge chunk of it spreads some fuds that will cause for some holders to sell.  A single event about crypto also causes a chain effect on bitcoin that it can pump or dump quickly if a particular institution did something about it.

In my opinion it is because we are still all very early in the Bitcoin era. It is always at the beginning that there is a lot of volatility. If we have a larger adoption like for example a currency than we will have Bitcoin tied to physical goods and this will stabilize it.

If you look at the average bitcoin price volatility over any year, it remains at a modest range between 10-15%.

From my perspective, bitcoin has been made notorious for being "too volatile" - but this phrase comes from its short term movements which became popular among public because it was catchy and got attention. Same thing being applied over a long time frame of a year shows less difference.

Similar assets in the stock market or precious metals also show such volatility. If regulation were to come in place, and that too about exchanges and daily volumes then only volatility would decrease. But these talks about bitcoin "instability/volatility" it is an exaggeration if you ask me.

bitcoin is a new asset when compaire with other major stocks and assets. just think gold, gold has a long long history and price is well established and mc is about $12.001 T. when the market cap of a stock or asset is large that assets or stock has  more liquidity .  so the price movement is slow. thats why low cap and micro cap altcoins in crypto market pumps like 1000% and dumps 99% . so bitcoin is still in the early stage acctually. it has a very tiny mc when comparing with other stokes such as gold. thats why bitcoin suddently pumps 20% and dumps 20%. volatility of bitcoin has been lowest with the time and will be further because bitcoin is getting attention from new investors and it pumps more liquidity to bitcoin.

there is always some level of volatility in financial markets, just to a greater or lesser extent
how can we make a profit if there is no volatility in the market?

talking about bitcoin volatility is greater than other markets, i think it's due to regulation
there are still no specific regulations for bitcoin, so in addition to supply and demand that determine the price, there will be price manipulation forces that make the bitcoin price fluctuate sharply in the short term

It’s such a young asset so extreme volatility is to be expected. To be honest, volatility is your friend, bitcoin is the hardest money around. When bitcoin is in a large downtrend there aren’t many other investment opportunities so attractive. Volatility in your friend, use it to your advantage.

While there are many factors which explains the volatility of bitcoin one of the most important are its users, people come to this market expecting to encounter a great deal of volatility, and in return this predisposes them to act upon any movement which may have the potential to produce big enough profits, so in a way the volatility of bitcoin in part is caused by a self-fulfilling prophecy since people come to this market in part due to that volatility.

They've forgotten to emphasize the completely inelastic supply:

Sure, if supply is inelastic (which is what they mean with scarcity?) then once supplied quantity changes, the price will change from the opposite direction even more. However, being completely inelastic means the price is responsive exclusively to changes in demand, and that's the game changer. Demand or demanded quantity have zero affectation to supply.

Everything about the financial market need to be volatile or else it will not be able to be tradable. The volatility of a coin makes it easy for traders to be easy for them to buy and sell at random time. The market needs to move always not stagnant like the water in a pond. This movement makes the market more lively and buyers and sellers will have enough time to get I'm the market and leaves the market without any stress so we can buy at the top and sell at the bottom.

If we make a simple comparison about the most stable cryptocurrencies in terms of price, Bitcoin will definitely be the best of them all. It is an emerging market and investors (users in general) are still in a state of hesitation regarding it, so it is normal for the price to witness sharp movements either up or down.
Generally speaking, like any other product, its price remains in a state of instability as long as its use is not yet widespread. With the expansion of its spread, the price will move to stability with the stability of the balance of supply and demand.

there are a lot of people interested in investing in bitcoin, and they are mostly attracted to its riskiness, high volatility, and characteristic which is going to make bitcoin even more volatile and interesting in the future.

i think it would be boring if bitcoin ceased to be volatile to become a stable asset like gold, people would leave the market and would find a volatile market to invest, i entered the market and invested in bitcoin because of its volatility

True, those who are new to the market take this volatility as a problem, but they gradually realize with trading experience that volatility can be a friend or foe depending how their own perspective.

Price manipulations are occurring mostly in the short term, like I said in my previous post, the yearly volatility remains between 10-15% which is a modest range.

Short term changes in price makes newbies panic and sell and end up in a loss, this practice is common and there are very few newbies who know how to handle this. Lack of patience makes these markets even more volatile in the acute short term stage.

For those have come from different other speculative markets, this should be easier to cope up with.

That's when all countries already accept Bitcoin as a legal tender or at least legal to be used and it's already become global reserve currency. It's sound impossible and high unlikely, but I think Bitcoin enthusiast wouldn't stop dreaming, just like how Bitcoin is worth for $100 per each at the early invention and now it's worth 200x more after ten years later.

People aren't converting to fiat money anymore, but they're converting to satoshi when they want to pay anything.

The price of a cryptocurrency depends on many things, and the price of bitcoin fluctuates as it is influenced by supply and demand, investor and user sentiment, government regulations, and media hype. All of these factors work together to create price volatility.
There are many factors that cause bitcoin or other cryptocurrencies to be highly volatile, such as existing conflicts and other news. And Invest only what you can afford to lose.

I feel the number one point is very valid and it will continue to be valid because there is no how every institution, everyone  and every country will agree to one term of regulation. The regulation would be country by country base, government by government base.
Apart from the above 4 points listed, it is good that we understand that volatility is a feature of bitcoin, so it can be true to say that it is the nature of bitcoin to be volitile. Let us understand that and have peace of heart.

There is a good chance that we will not see this type of volatility forever. People do not realize that we are in our infant stages when you consider how new bitcoin is to all other markets. Time is linear and that means it will keep on being bigger and bigger because it will be here for a longer time. When there are way more people and a lot more money involed, we will be as volatile as Fortune 500 stocks, still a bit volatile depending on the day, but not as much as today. When that moment comes, people wish they were involved with crypto when it was volatile, because we make huge profits now, people won't be making these type of profits when we have less volatility.

I agree that the lack of regulation is probably the main reason for volatility. But that's if we're talking about the regulation in the sense of monetary policies, controlling the supply and setting state regulations of the price. If we're talking about regulation in a sense of legislation related to Bitcoin, then I don't think such regulation would affect volatility. So this first cause will stay out there in the future, as Bitcoin's supply is fixed, and Bitcoin is decentralized by its nature. The second reason, as you can probably see from my elaborations above, is very close to the first one for me, as it's because of the lack of price and supply regulations that the price depends on demand and supply and can't be artificially stabilized in a way fiat can be. As for lack of confidence in Bitcoin, I'd instead put the reason of low adoption: I do believe that if Bitcoin gets as widespread as smartphones, it will get for stable. And finally, world conflicts are something that can indirectly (via FUD) affect the price, yes, but I don't think it should count as a fundamental reason.

This.
I almost think back then that whales are individuals until I had the thought of maybe the richest people in the world are Bitcoin whales in disguise, but no it is just these institutions. There are a lot of financial-related institution in UK I had worked for before and they were pretty much mentioning cryptocurrency all the time so I would not be surprised that they are also possibly a crypto whales that we're talking about here.

Lol, you could have list those 4 fundamental reasons here so that we don't need to get out of the forum to see these fundamental reasons.  But I believe Bitcoin is volatile because there is no central authority that preserves its value.  Bitcoin prices depend on the market demand so it is dictated by supply and demand.  That is the reason I believe why Bitcoin is volatile.