Why Is Bitcoin's Value So Volatile?

[Kemarit]

I'm not saying with 100% sure, but seems it's the speculation what makes the volatility so high. Big holders, the whales, choose when provoke flutuations, making profit from trading this way. In a decentralized world who has more coins control the market, from my experience on Crypto-Currency world that is what I see. The little investors are just the little fishes on the sea, nothing they do cause a big impact.

We should remember that bitcoin is purely driven by speculation a negative news impacts the price to go down, while a positive once shoots it up. That's how it really works. So volatility of bitcoin has something to do with it. Yes, bag holders can also spike fluctuations, like if they sell a huge amount, it will cause a massive downward spiral and others would panic as well causing the price to crash. Little investors or the casual one are just fishes and should not go against the whales in the ocean, we can only react and can't go against the flow.

Since Bitcoin isn't yet adopted in most places, a large part of its supply and demand is based on price speculation.  So as the confidence changes, the price fluctuates a lot.  As its adoption increases and people send or receive payments for commerce instead of speculating on its price, it should be less volatile.

The rate of adoption of bitcoin is really slow because of several factors. But once it got to a point that people are really using bitcoin for online purpose, I think it can somewhat put less volatility. But what we all love about bitcoin is the price swings, specially for day traders and even for long term investors.

[mnmnmn]

Commodities like oil have some intrinsic value - i.e. oil can be used to produce energy, which can be used to increase the value of raw materials by turning them into a finished product. That potential increase in value thus dictates how much someone is willing to pay for oil.

Since Bitcoin doesn't have that intrinsic value, it's price is all based on speculation, which makes it very uncertain, very volatile, and very open to market manipulation.

[BCTBF]

Why Is Bitcoin's Value So Volatile? I am confused to buy bitcoin now when it's value is too high.

For me there is nothing unusual with bitcoin values because bitcoin values are indeed volatile. If you feel confused with bitcoin you better undo your intention to buy bitcoin and you better learn first how bitcoin works, you must have knowledge and understanding enough on bitcoin so that your investment in bitcoin can produce good result.

[Aamir1]

Why Is Bitcoin's Value So Volatile? I am confused to buy bitcoin now when it's value is too high.

I don't think there will come any moment when your confusion gets over because the price of bitcoin does not seem to be stable at all. Sometimes its high, and sometimes its too high, and seeing the market, it has been growing since its start though losing value in between but in the long term, it has been growing, so if someone really wants to invest in bitcoin, i don't think they should be confused seeing the potential bitcoin produces for everyone.

[coinfast]

The price of Bitcoin depends on the community and that is why the price of it often goes up and down. the more people knowing it will make it less volatile. the growth of Bitcoin will still be huge, price Volatility is one of the characteristics of Bitcoin since price would really vary, depending on the supply and demand of Bitcoin.

[Vaskiy]

The volatility happens in accordance to the circulation volume there in the market. Right now volatility is a major issue for very few users, who haven't tried making profit through the same. Some stated that due to volatility businesses were not much accepting bitcoin. Then how a country as a whole accepts bitcoin. This is all about trust and the behind technology.

[Chachacoin17]

The volatility happens in accordance to the circulation volume there in the market. Right now volatility is a major issue for very few users, who haven't tried making profit through the same. Some stated that due to volatility businesses were not much accepting bitcoin. Then how a country as a whole accepts bitcoin. This is all about trust and the behind technology.

As what I have studied, the smaller the market cap an asset has the more volatile. Just for example comparing it between a bucket of water versus a  swimming pool. So if you throw a rock on the bucket, the water is more disturbed than throwing a rock into the ocean.

[CrewKitten]

Bitcoin's value is volatile because there are not enough users/money invested worldwide.

Even a multimillionaire can have an effect on the price because if he buys lots of Bitcoins the price will go up.

Also if someone with lots of Bitcoins from 2009 or 2010 comes along then he dumps his coins there can be a global price drop.

But when there is more money invested (over $1,000,000,000,000) then no one will be able to affect the price a lot. Not even the richest people in the world. This is when the volatility will stop.

[speem28]

Bitcoin is and always will be very volatile, but this does not mean having to give up his purchase. If you look at the chart of growth rates you will see that every year the price of bitcoin is increasing. This trend will persist for a very long time so you can buy it at any time.

so i should buy bitcoin at this point or when the value reduce.

Wait for the value of bitcoin to decrease. There are many factors that trigger bitcoin's volatility like the rate of adoption for bitcoin is is being interfered by the news or the media. This kind of news scares potential bitcoin users and they are being forced to not invest in bitcoin at all. Watching or hearing bad news about bitcoin, triggers hesitation to potential users so mass adoption is progressing very slowly.

[futile-resistance]

Bitcoin's value is volatile because there are not enough users/money invested worldwide.

Even a multimillionaire can have an effect on the price because if he buys lots of Bitcoins the price will go up.

Also if someone with lots of Bitcoins from 2009 or 2010 comes along then he dumps his coins there can be a global price drop.

But when there is more money invested (over $1,000,000,000,000) then no one will be able to affect the price a lot. Not even the richest people in the world. This is when the volatility will stop.

Indeed, this is the actual reason behind the volatile nature of Bitcoins. To become stable, it still needs much more support around the globe. The pace at which Bitcoins are becoming popular, it would not be an exaggeration to predict that within a decade Bitcoins will become the most stable digital currency worldwide.

[GreenBits]

Bitcoin's value is volatile because there are not enough users/money invested worldwide.

Even a multimillionaire can have an effect on the price because if he buys lots of Bitcoins the price will go up.

Also if someone with lots of Bitcoins from 2009 or 2010 comes along then he dumps his coins there can be a global price drop.

But when there is more money invested (over $1,000,000,000,000) then no one will be able to affect the price a lot. Not even the richest people in the world. This is when the volatility will stop.

Indeed, this is the actual reason behind the volatile nature of Bitcoins. To become stable, it still needs much more support around the globe. The pace at which Bitcoins are becoming popular, it would not be an exaggeration to predict that within a decade Bitcoins will become the most stable digital currency worldwide.

This isn't even the whole of it. The lack of liquidity due to its small total valuation (yes, this is small) makes the uneducated investors respond with more effect. Dips become dumps; natural growth gets misinterpreted and then exaggerated.  A perfect example of this is what happened with BCC as it became available after the fork. People couldn't arb because everything was janked up, so the price started varying wildly per exchange (250 on hitbtc, 700 on Bittrex).

For whales it's hard to move your position around without making the market react.

And for those that say a billion is too high to manipulate, remember, rich people can work together

[Pepito Manaloto]

Why Is Bitcoin's Value So Volatile? I am confused to buy bitcoin now when it's value is too high.

Don't be confused. Bitcoin's price depends on the market's demand. Its value at this moment is so expensive and maybe it has to do with the relation of supply and demand. Everything and anything that is in demand will result for a high value. Maybe, Bitcoin will be less volatile if it will be legalized to most of the countries where most of the people will use , spend and invest to it. That will make it in demand and will maintain a high price.

[babysweetTiger0401]

Bitcoin is and always will be very volatile, but this does not mean having to give up his purchase. If you look at the chart of growth rates you will see that every year the price of bitcoin is increasing. This trend will persist for a very long time so you can buy it at any time.

so i should buy bitcoin at this point or when the value reduce.

Yes, it is still you need to buy more as long as you can afford to do it. Because like what others community expecting about in bitcoin it will reach 10, 000$ or more and more. Don't wait for the time when bitcoin reach it. it maybe down for its for awhile only then it will resume to the original value or more.

[RedditMaster]

As Bitcoin becomes more accepted globally, its value will become less volatile. For the time being, it is volatile because large individuals/corporations can have a big effect on the price due to the relatively low market cap.

[matanglawin]

Why Is Bitcoin's Value So Volatile? I am confused to buy bitcoin now when it's value is too high.

Volatility takes place for the reason that Bitcoin's value is hookep up to market's demand. There's no need to be confused. If you are worried about a sudden dip after you bought Bitcoin, after few days or weeks, it will again increase as its normal or before the dump and maybe, bigger. It is normal, I think. It will be less volatile if more people will engage themselves to Bitcoin.

[Hydrogen]

Bitcoin's relatively low market cap is one factor contributing towards volatility. A few whales buying or selling can make a huge dent in the price due to market cap being low in comparison to the amount of coins exchanged. If the market cap of bitcoin were $1 trillion it would be more difficult for buyers and sellers to make a dent in the price as an overall percentage and btc volatility would likely be more stable.

Bitcoin also being prone towards things like hard forks, SEC rulings, exchange instability, theft and having markets like silk road and alpha bay shut down also increases volatility.

[HasHe]

Why Is Bitcoin's Value So Volatile? I am confused to buy bitcoin now when it's value is too high.

For any currency,there is a government or central bank to control its price volatility.But for bitcoin,there is no such central authority to control its price since it is a decentralized currency.Its price either increases or decreases in proportion to increase or decrease in demand for bitcoins.By this way,we could say that bitcoin expresses its original value.Earlier,chinese investors used to dump their huge volume of bitcoins to make price fall to buy cheap bitcoins.That was also a reason for its volatility.But now,since bitcoin has investors all over the world,chinese gamblers are no more able to manipulate bitcoin price.Thats why bitcoin price is less volatile now.

[Barbut]

Bitcoin's relatively low market cap is one factor contributing towards volatility. A few whales buying or selling can make a huge dent in the price due to market cap being low in comparison to the amount of coins exchanged. If the market cap of bitcoin were $1 trillion it would be more difficult for buyers and sellers to make a dent in the price as an overall percentage and btc volatility would likely be more stable.

Bitcoin also being prone towards things like hard forks, SEC rulings, exchange instability, theft and having markets like silk road and alpha bay shut down also increases volatility.

To make it simply for understanding, some group of people can manipulate with bitcoin price. They can manipulate with supply and demand until one point I think, but people tend to follow market movements and they contribute to drop with panic selling, or to price rise with pushing money into bitcoin if news are good.
I agree with you about future, this fluctuations can stop one day when market grow a lot, then it will be hard to manipulate with so big market. With legalization some governments will make some regulations and that
can also inflict on fluctuations.

[fasdorcas]

Bitcoin's value is volatile because there are not enough users/money invested worldwide.

Even a multimillionaire can have an effect on the price because if he buys lots of Bitcoins the price will go up.

Also if someone with lots of Bitcoins from 2009 or 2010 comes along then he dumps his coins there can be a global price drop.

But when there is more money invested (over $1,000,000,000,000) then no one will be able to affect the price a lot. Not even the richest people in the world. This is when the volatility will stop.

Indeed, this is the actual reason behind the volatile nature of Bitcoins. To become stable, it still needs much more support around the globe. The pace at which Bitcoins are becoming popular, it would not be an exaggeration to predict that within a decade Bitcoins will become the most stable digital currency worldwide.

This isn't even the whole of it. The lack of liquidity due to its small total valuation (yes, this is small) makes the uneducated investors respond with more effect. Dips become dumps; natural growth gets misinterpreted and then exaggerated.  A perfect example of this is what happened with BCC as it became available after the fork. People couldn't arb because everything was janked up, so the price started varying wildly per exchange (250 on hitbtc, 700 on Bittrex).

For whales it's hard to move your position around without making the market react.

And for those that say a billion is too high to manipulate, remember, rich people can work together

Price for everything in the world is volatile, even the goods and food stocks you from the market.
Their price is likely to increase, and sometimes you see their price going below the rate you had expected. All these things are due to exchange (correct me if I am wrong).

[Sled]

Bitcoin's value is so volatile because no one is controlling or having a power to dictate the price of bitcoin. Bitcoin is only basing on demand and supply so if the supply is not stable and also the demand then the value of bitcoin will not be stable also. It is all about the demand and supply and if we want to be stable on the value of bitcoin then we should make sure first that the supply and demand is stable.