Volatility determined by percentage of traders vs hodlers?

[mikege00]

Hi,

I saw a statistic online, that currently lists the percentage of hodler of bitcoin (holding 1+ years) vs number of traders who hold btc 1 month or less. Currently there are 64.99% hodlers of bitcoin vs %35.01 of traders. My question is, does an increase in percentage of traders increase the magnitude of price swings? If say the percentage of hodlers of bitcoin stabilizes in the future to 90%, will the magnitude of short term price swings also decrease? In other words does volatility decrease as percentage of hodlers increases? Is that why "bluechip stocks" are less volatile? because a large percentage of the investors are holding?

[1715404953]

1715404953

[batang_bitcoin]

Good understanding about volatility. But the main reason for volatility is the demand of bitcoin. Whether there are more holders or traders as long as the demand is changing, there will be a volatility. We will never know if the time comes that there will be more holders than traders. Value could raise by that time and demand could be higher because there will be a less in the circulation if everyone holds. I think it will even make the price higher and nothing will change with its volatility.

[error08]

Obviously, bitcoin volatility causes by traders, if there are 90% holders and only 10% of traders, assume everyone only possesses BTC1 then the price should be stable.
The key is how many bitcoins each person has, the more one has, the more likely the price will swing in short terms.
Considering the amount of bitcoin in the circulating supply and the amount left to mine, then price stability is far from being a reality.

[maxreish]

You just make it complicated. Let's make it simple then.

Will those number of traders/holders affect the btc volatility?

Ofcourse, the more they hold and sell the bitcoin the more it affects the price. Remember that the price of btc always depends on yhe "supply and demand". So if that holders (whales for example) sell off huge amount of bitcoin, btc price will plummet.  Same goes with the percentage of traders but there are actually many reasons for the price volatility of bitcoin. Like for example, news events, legal matters, etc.

[NeuroticFish]

I'd make it simpler and make the relationship only by the amount of Bitcoin the traders have. The number of traders is not so much relevant.
And it's hard to quantify, since I expect that many traders may have amounts (bigger than 1 BTC!) kept in exchanges' cold wallets for more than one year.

[Psynthax]

Volatility in my opinion heavily depends on how large the market volume itself. You can have a crypto with 90% of holders if the volume in the market is kinda low it's vulnerable to market manipulation or even huge pump and dump. Traders themselves are not the major factor that make the price swing but other factor like demands, rumour that could affect selling or buying activities and many more. But, the highest the market volume, the more money needed to make market swing. It's not like the amount of traders and holders not giving any impact at all to the market its just not really the major factor playing here.

[joniboini]

Obviously, bitcoin volatility causes by traders, if there are 90% holders and only 10% of traders, assume everyone only possesses BTC1 then the price should be stable.

I think this could be misleading. More holders don't necessarily mean Bitcoin will be more stable. If the buy/sell volume is not balanced or the depth is shallow then it might as well more volatile then ever.

[death69]

The volatility might be determine by percentage of traders vs holders, but the price of bitcoin is certainly built up by the demand and the supply. Of course the price of bitcoin will be more stable if the number of traders decreases. We might observe a more healthy uptrend which only has slight corrections. But the price of any asset by the demand and the supply. And right now, demand of bitcoin is higher than supply which makes the price of bitcoin increases rapidly in the past few days

The market contains numerous variables. Each variable is anyone who involves in this market. With technical analysis, we can observe a bigger picture which help us to make a right decision when making an order. So I think there is no reason to care about the percentage of traders vs holders?

[Sebas.tian]

Basically, the traders do cause the Bitcoin volatility more than the Holders in my honest opinion, becasue if everyone hold some of their holdings right now; mean that, there are going to be less volatility in the market. There are problems arising from those traders whom have huge Bitcoin for trades sometimes those with huge amount constitute major challenge in the market.

[RealMalatesta]

Traders becoming something more common definitely changes the price, but holders change the price a lot more in quicker fashion. So, what volatility shows here is that if there are more traders, we get to see a lot more swings daily but to lower level, like maybe 10% and under for trader world if they became bigger power.

However when holders are bigger, they do not make daily swings because they do not buy or sell daily constantly, they do it in bulk and that is why when there is a big holder that ends up buying huge amount or selling a huge amount, the swing is much bigger and have like 50%+ affect in long term just like we had in past one month, but it is less common and happens a lot more rarely. Hence, they both have volatility but different ways.

[CapGelatik]

volatile it is due to lack of demand rather than supply or vice versa, not from holders,
holders keep the price from falling from support, but traders do whatever they want,
this is how cryptocurrency is very volatile.

[sheenshane]

All the opinions and suggestions that were posted above are correct.

For traders and hodlers affect the volatility on the Bitcoin's price if more hodlers decided not to trade and then the demand will be higher which brings an increase in the price and if fewer traders and more investors decided not to trade then the price will be constant or possibly a drop in the price may occur.
The fact is the main factor that affects the volatility is the supply and demand in Bitcoin and this demand doesn't always come from traders, there are some it may also come from hodlers or a new one who wants to start investing with Bitcoin as well.

The nearest answer is, the price of Bitcoin fluctuates every now, and then that makes the price volatility due to the fact that traders and hodlers aren't doing the same activities.

[dunfida]

Hi,

I saw a statistic online, that currently lists the percentage of hodler of bitcoin (holding 1+ years) vs number of traders who hold btc 1 month or less. Currently there are 64.99% hodlers of bitcoin vs %35.01 of traders. My question is, does an increase in percentage of traders increase the magnitude of price swings? If say the percentage of hodlers of bitcoin stabilizes in the future to 90%, will the magnitude of short term price swings also decrease? In other words does volatility decrease as percentage of hodlers increases? Is that why "bluechip stocks" are less volatile? because a large percentage of the investors are holding?

Understandable that price swings and movement could really be even more when there are lots of people who had been trading and also i dont really that much
on believing into those numbers yet its not really that precisely determined on whose been holding for years and been doing active trading.We can just base off
into exchange statistics but knowing the precise numbers arent really that the same.You had mentioned about stocks are less volatile then its expected
yet price cant swing that much if you do compare with crypto assets.

[chip1994]

Hi,

I saw a statistic online, that currently lists the percentage of hodler of bitcoin (holding 1+ years) vs number of traders who hold btc 1 month or less. Currently there are 64.99% hodlers of bitcoin vs %35.01 of traders. My question is, does an increase in percentage of traders increase the magnitude of price swings? If say the percentage of hodlers of bitcoin stabilizes in the future to 90%, will the magnitude of short term price swings also decrease? In other words does volatility decrease as percentage of hodlers increases? Is that why "bluechip stocks" are less volatile? because a large percentage of the investors are holding?

Exactly. Bitcoin's price fluctuations are quite similar to those around us. Let's take another example like Rice. For example, in a village there are only 10 kg of rice but more than 100 households. therefore, each household has only a little rice, about 100 grams, and then the Rice shortage occurs. Certainly some households will accept to hold rice and wait until the demand increases, the price of rice will inevitably increase. it will appear a lack of price volatility. This is also part of the supply - demand theory.

[marcous]

Hi,

I saw a statistic online, that currently lists the percentage of hodler of bitcoin (holding 1+ years) vs number of traders who hold btc 1 month or less. Currently there are 64.99% hodlers of bitcoin vs %35.01 of traders. My question is, does an increase in percentage of traders increase the magnitude of price swings? If say the percentage of hodlers of bitcoin stabilizes in the future to 90%, will the magnitude of short term price swings also decrease? In other words does volatility decrease as percentage of hodlers increases? Is that why "bluechip stocks" are less volatile? because a large percentage of the investors are holding?

The point is that the higher the dominance of Bitcoin, the volatility of other cryptos will have an effect.  And if the dominance of Bitcoin is greater, automatically there will be more Bitcoin holders than altcoins.  considering Alt will crash when BTC.D gets higher

[DoublerHunter]

The point is that the higher the dominance of Bitcoin, the volatility of other cryptos will have an effect.  And if the dominance of Bitcoin is greater, automatically there will be more Bitcoin holders than altcoins.  considering Alt will crash when BTC.D gets higher

^ There are a lot of factors that affect the volatility in bitcoin's price it is not always these two options, it could be for new investors that keep on coming in as well as slow transactions that await to be processed in exchanges. The fact that the price keeps on swinging is because of the demand and availability of bitcoins in the market because if traders and holding won't do any movements still there could be changes on the price if demand will occur from a third party which could be a new investor or a private company that acquires bitcoin in their services.

[xZork]

I think that increasing the number of traders will increase the degree of price volatility.
Any market operates on the principle of supply and demand, when people have a need to buy and sell bitcoins more, the price fluctuation will be constantly changing.

[KnightElite]

Hi,

I saw a statistic online, that currently lists the percentage of hodler of bitcoin (holding 1+ years) vs number of traders who hold btc 1 month or less. Currently there are 64.99% hodlers of bitcoin vs %35.01 of traders. My question is, does an increase in percentage of traders increase the magnitude of price swings? If say the percentage of hodlers of bitcoin stabilizes in the future to 90%, will the magnitude of short term price swings also decrease? In other words does volatility decrease as percentage of hodlers increases? Is that why "bluechip stocks" are less volatile? because a large percentage of the investors are holding?

Understandable that price swings and movement could really be even more when there are lots of people who had been trading and also i dont really that much
on believing into those numbers yet its not really that precisely determined on whose been holding for years and been doing active trading.We can just base off
into exchange statistics but knowing the precise numbers arent really that the same.You had mentioned about stocks are less volatile then its expected
yet price cant swing that much if you do compare with crypto assets.

Not all of stocks have low volatility because there are some stocks who have high volatility similar to cryptocurrencies, in terms of what good between trading or investing in volatility of cryptocurrencies; volatility is a matter especially if you are day trader wherein you are making profit in quick swing high or quick swing low if you are doing some shorting. A day trader should choose a cryptocurrency that have high volatility in order to maximize the gains. If you will make investing and not trading, volatility is just a little factor because as a investor you are not hourly or minutes monitoring the chart so you do not have care if the prices are making swing high or swing low in just short period of time.

[XZERO1]

does volatility decrease as percentage of hodlers increases? Is that why "bluechip stocks" are less volatile? because a large percentage of the investors are holding?

That is most probably true and that makes so much sense, and on the other hand the number of traders could increase volatility as well, there are some coins that are a bit more stable in crypto market and I actually can see people holding them either because they are just optimistic about these coin's future or they just use these coins to pay for stuff when they shop online, for example Litecoin and Dogecoin are one of those coins that are a bit less volatile and they happen to have lower fees on their transactions too which makes them great for paying online for services and goods.

[davis196]

Hi,

I saw a statistic online, that currently lists the percentage of hodler of bitcoin (holding 1+ years) vs number of traders who hold btc 1 month or less. Currently there are 64.99% hodlers of bitcoin vs %35.01 of traders. My question is, does an increase in percentage of traders increase the magnitude of price swings? If say the percentage of hodlers of bitcoin stabilizes in the future to 90%, will the magnitude of short term price swings also decrease? In other words does volatility decrease as percentage of hodlers increases? Is that why "bluechip stocks" are less volatile? because a large percentage of the investors are holding?

I think that the price volatility would increase if the amount of hodlers increases as well.More hodlers means less Bitcoins in circulation,which means less supply of Bitcoin on the market.This combined with a not-so-stable demand for Bitcoin would cause bigger price volatility.
In order for the price volatility to decrease,we need more traders to bring more Bitcoin supply/liquidity on the market.
By the way,I don't believe that your statistical data about 65% hodlers and 35% traders is accurate.