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Author Topic: Why price is volatile if amount of bitcoin doesn't decrease?  (Read 90 times)
Leokey
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March 08, 2018, 06:20:24 AM
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 #1

Hi guys!

So the other day I was wondering why the price is so extremely volatile even though the amount of bitcoin do not actually decrease?

I understand the whole thing with supply and demand, but shouldn't the fact that the total amount of BTC is circulation is limited constantly boost the price up or keep it stable?

For example with the last dip to 6k it is said that the whale was selling huge amounts of bitcoin, which made it go down. Alright, but if he sold it, doesn't it mean that someone else just hold it now?And if yes, why the price is sliding?

I know that I am missing some crucial point. Will be glad to hear you out on this one.
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Ausgewielt
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March 08, 2018, 06:33:46 AM
 #2

The price of bitcoin only determined by ask and bid. The last  transactions in exchanges site is the actual price of bitcoin. Bitcoin will have no value if no one want to buy bitcoin and bitcoin value will be very hgh if many people are want to buy bitcoin.

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March 08, 2018, 06:42:42 AM
 #3

The problem of supply and demand, when all want to buy a brand of milk, the brand of milk will be reduced in the market, then the price will certainly rise, but if this milk no one to buy, be put back to the supermarket, the longer nobody buy, Then the price will be low. So when many people want to buy Bitcoin, but there are only so many bitcoins on the exchange, the price will definitely fall. When the whales sell their bitcoins, the exchange will have more coins and prices will naturally fall. .
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March 08, 2018, 07:00:16 AM
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For example with the last dip to 6k it is said that the whale was selling huge amounts of bitcoin, which made it go down. Alright, but if he sold it, doesn't it mean that someone else just hold it now?

Not necessarily. If they dump them at an exchange, exchanges will have a surplus of circulating Bitcoins, making the price drop. They're not considered to be "held" by anyone because they're constantly on the selling block.

This is where demand plays its part. There are lots of coins up for sale, and there's more people selling than buying, so the effective "amount" you're speaking of is actually increasing. You need to look at the amount of circulating coins rather than the total supply.

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March 08, 2018, 07:19:49 AM
 #5

For example with the last dip to 6k it is said that the whale was selling huge amounts of bitcoin, which made it go down. Alright, but if he sold it, doesn't it mean that someone else just hold it now?

Not necessarily. If they dump them at an exchange, exchanges will have a surplus of circulating Bitcoins, making the price drop. They're not considered to be "held" by anyone because they're constantly on the selling block.

This is where demand plays its part. There are lots of coins up for sale, and there's more people selling than buying, so the effective "amount" you're speaking of is actually increasing. You need to look at the amount of circulating coins rather than the total supply.

So it means that if everybody is selling, the exchange is having an overstock of the coin, making the price drop?

I see the point with the total supply and actual amount of coin curculating on the market. Thanks
skorupi17
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March 08, 2018, 08:04:00 AM
 #6

The supply is not a point of interest in this matter. Set aside the complexity of who gets the sold Bitcoin but rather, think about the demand. There are 2 factors for the price fluctuation, namely the supply and demand, if the other one does not have any impact at all, take a look at the other factor.

Demand is the point of interest here. At the current situation, the demand for Bitcoin is low. And because only few would like to buy Bitcoin, then the price decrease comes into action.
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March 08, 2018, 07:39:48 PM
 #7

The supply is not a point of interest in this matter. Set aside the complexity of who gets the sold Bitcoin but rather, think about the demand. There are 2 factors for the price fluctuation, namely the supply and demand, if the other one does not have any impact at all, take a look at the other factor.

Demand is the point of interest here. At the current situation, the demand for Bitcoin is low. And because only few would like to buy Bitcoin, then the price decrease comes into action.
Here I would like to add that the supply of the bitcoin in the market is still not that enough so that everyone can get it on the amount they are happy with, but still due to less demand the fluctuation in the market is being noted. This decline should not be a problem for those who are investing to hold because for being in loss for 2 weeks is nothing when you know that you are going to gain for very long time.
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March 08, 2018, 07:51:46 PM
 #8

You are not wrong completely here. But when any whales sell their BTC then it doesn't mean it is taken by other persons immediately and it doesn't relate to the holding of the same amount of BTC by someone else. The BTC that sold gets into the circulation and thus dilates the stream of inevstment. I mean the supply increase for that specific period and the prices doesn't move up until the more amount of stakes are replaced into the circulation. By the way volatility is completely different issue or nature of the bitcoin and it has got nothing to do with your question. It will affect the prices surely but not just the decreasing order.

   

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March 08, 2018, 08:11:35 PM
 #9

So it means that if everybody is selling, the exchange is having an overstock of the coin, making the price drop?

I see the point with the total supply and actual amount of coin curculating on the market. Thanks

Not really. There's never something like "everybody is selling". For someone to sell someone has to buy. Exchanges aren't buying coins from you, other people are. Every time you trade you do it with another person, so what you see as a dump is actually so many coins being sold at once that all orders set at a given level are getting filled and disappear from the list, making lower orders fill and so on. The stock of the coins remains the same, only the owners change.

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March 08, 2018, 08:24:52 PM
 #10

As my friend said ss890 your answers are all close to the truth. Based on assumption of all of you means "obviously" volatile bitcoin depends on the user not on the amount of bitcoin.

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March 08, 2018, 08:33:42 PM
 #11

Hi guys!

So the other day I was wondering why the price is so extremely volatile even though the amount of bitcoin do not actually decrease?

I understand the whole thing with supply and demand, but shouldn't the fact that the total amount of BTC is circulation is limited constantly boost the price up or keep it stable?

For example with the last dip to 6k it is said that the whale was selling huge amounts of bitcoin, which made it go down. Alright, but if he sold it, doesn't it mean that someone else just hold it now?And if yes, why the price is sliding?

I know that I am missing some crucial point. Will be glad to hear you out on this one.
It is true that the total amount of bitcoin is not decrasing, but the amount of bitcoin being sent and recevied is what actaully determines the price, even though in theroy poeple holding bitcoin will eventually boost the price up but things like investments and politics are the ones that affect the demand which by its turn effects the supply circulating, right now most of the investments made withing the cryptocurrency market are mostly dominated by ICOs so the demand on bitcoin has gone down from what it used to be couple of months agao, and i think that impacts the price.
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March 08, 2018, 08:42:12 PM
 #12

Even when something is scarce there could come a time when nobody will want it.  This can sometimes be seen in the antique or collectibles trade.  An item is scarce but when people lose interest and no longer what it then the price drops.  If everybody wants these items then price usually rises if there is a limited supply.
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March 08, 2018, 09:02:20 PM
 #13

This is the very first and most basic currency! This is the case with bitcoin, because there is no competitor to bitcoin! Bitcoin is a repertoire, like an old one - a valuable thing! Well, because of the increase or decrease in capitalization, there are such sharp jumps in the crypto market!

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CodyAlfaridzi
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March 08, 2018, 09:15:02 PM
 #14

Hi guys!

So the other day I was wondering why the price is so extremely volatile even though the amount of bitcoin do not actually decrease?

I understand the whole thing with supply and demand, but shouldn't the fact that the total amount of BTC is circulation is limited constantly boost the price up or keep it stable?

For example with the last dip to 6k it is said that the whale was selling huge amounts of bitcoin, which made it go down. Alright, but if he sold it, doesn't it mean that someone else just hold it now?And if yes, why the price is sliding?

I know that I am missing some crucial point. Will be glad to hear you out on this one.

The volatility of Bitcoin price is due to its uncertainty in a lot of things, like government acceptance, the ecosystem health, development, etc. The current fall is rumored because the trustees of Mt.Gox are selling their Bitcoin, which is a huge amount, thus pushing the price down. There are also some bads news from China (again!), as they recently banning exchanges social media account and that doesn't very good. But hey it's China, they have numerously "banning" Bitcoin before.

Volatile price is what most people and most governments don't like about Bitcoin, it makes Bitcoin too speculative and risky. That's why we don't see Bitcoin officially regulized yet.

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March 08, 2018, 09:37:35 PM
 #15

If we set the price of Bitcoin to let's say 10000$ and fix it how this could be good for the market?
You can't sell a big amount of Bitcoins in short time and not create the price drop and fear in people.

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March 09, 2018, 10:16:05 AM
 #16

I understand the whole thing with supply and demand, but shouldn't the fact that the total amount of BTC is circulation is limited constantly boost the price up or keep it stable?

BTC supply being limited should exert a corrective influence on markets. Its not an instantaneous reaction. It takes time. Within a worst case scenario it may take months or years.

The paradigm shift from bitcoin being a long term, store of value, HODL investment vehicle towards bitcoin becoming more an instrument of speculation has altered bitcoin's price movement. The recent decline could also be seasonal in nature as transaction volume reduction occurs in the wake of the post christmas / post black friday consumer buying decline.

For example with the last dip to 6k it is said that the whale was selling huge amounts of bitcoin, which made it go down. Alright, but if he sold it, doesn't it mean that someone else just hold it now?And if yes, why the price is sliding?

I know that I am missing some crucial point. Will be glad to hear you out on this one.

The proportion of buyers to sellers determines price. When there are more buyers than sellers, demand is high and the price typically goes up. When there are more sellers than buyers, as in the case of whale dumps, demand is low and the price will typically decline. Although of course there are always exceptions to both of these paradigms.

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