Traders do add a lot of value to bitcoin by providing liquidity
This is speculative value and
it mostly adds to volatilityactually, it's quite the opposite. traders obviously add liquidity to both sides of the order book. increased liquidity fundamentally
reduces volatility, because it takes increased buying/selling volume to move the market.
what happens when order books are thin? slippage, which means higher volatility. can you imagine how thin order books would be if traders didn't exist?!
I definitely see what you mean
Moreover, I would likely say essentially the same if someone came up with a similar claim (that speculative value adds to volatility). But I'm not that someone and I can easily tell you why and where you are in fact wrong. Basically, you assume that Bitcoin is just about trading (read, speculation) and in these very specific conditions, you might be right after all. But if we take a wider look, your point can be easily refuted and this also explains why my claim is actually correct if we look beyond sheer speculation
i'm not saying bitcoin is just about trading. i'm saying that increased market liquidity dampens volatility.
that is a matter of fact
It is "a matter of fact" only in very specific conditions (i.e. in your head mostly)
whether speculation by traders adds volatility above and beyond their reduction of volatility via liquidity is a matter for debate. but you could never even begin to prove that traders represent a net increase in volatility
This sounds like complete gibberish to me. But I will just say that traders are not the only actors
I intentionally pointed out that it is speculative value since there can also be real value determined by real use. And if we take into account this value, your whole argument is instantly reversed
what is "real use" though?
if you're talking about people who buy BTC and use it as a p2p currency, they increase volatility by buying up market supply (reducing liquidity).
if you're talking about investors, they're speculating on the market just the same as traders (except they remove liquidity from the market for longer periods of time)
Basically, you don't see the forest for the trees
This shows that you can't look at the bigger picture, and thus can't understand why your whole argument doesn't hold. You feel like you are right indeed because you can't possibly grasp how you can be wrong. I understand your pains and anguish. And I tell you why you feel like that. You don't see why real use overrides speculative value because this real use in case of Bitcoin is virtually non-existent. That's why you are technically correct (with Bitcoin), but still wrong in general, "fundamentally" as you say