Why Bitcoin price is so volatile? What are the major factors that drive it?

[Bitcoin Guy]

I am wondering why Bitcoin price is much more volatile than the stock market?

Let's just stick with Bitcoin only.  Bitcoin have a market cap close to $1T as we speak and, yet, its price is still so volatile.  Is it because the availability of bitcoins in the market is low as most people (especially the new institutional investors) are hodling? 

Is it fair to compare Bitcoin (or crypto market as a whole) to a stock market like SP 500 (which currently has $31.61 trillion market cap)?  If so, Bitcoin cap is only 3% of the SP500.  Is it because of its relatively lower market cap which make it easier for its price to be manipulated (i.e., by a pump-and-dump)?

What do you think?

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[GreatArkansas]

Bitcoin price is volatile could because of some reasons.

• Speculation - different views on Bitcoin. If you are not familiar with or no knowledge at all of Bitcoin, you will not buy it.
• Bitcoin is still early - a lot of people still not introduced to Bitcoin. Less adoption, less trading volumes.
• 24/7 can be traded. Compare with stock markets that they have opening hours and closing hours for trading

Comparing other assets with Bitcoin especially with the stock market is good with the price only, but technically on fundamental, they are totally different. And they're also some charts that showing some correlations with other assets' price on Bitcoin price, just like gold.

I believe having a lower market cap, is more prone to price manipulation, whales can able make some move to price themselves.

[Ryker1]

Well, this is very technical for me but as far as I know why bitcoin is volatile just because of different possible factors, --that's it. There are too many factors to consider and the reason why it is volatile. In my own, the ^{[market size, fixed amount, and the low liquidity]} are those common reasons why bitcoin will fluctuate and becomes very volatile often. I think the trading activities will make bitcoin so volatile, those tiny, small, and becomes big transactions was contributed to becomes bitcoin move the price that can create volatility price.

[dothebeats]

You can factor in the "openness" of its market. With such nature of the market, anyone and everyone can freely buy and sell at any given point in time they so do like. They can literally buy and sell millions or billions without restrictions in time and in the platform provided that they are properly ID'd for KYC and AML regulations. This perhaps is the main reason I see as to why bitcoin is highly volatile, though its nature as a highly-speculative asset can still be included together with the open-market nature as well.

I believe having a lower market cap, is more prone to price manipulation, whales can able make some move to price themselves.

Prone, yes, although even high market cap assets can still be a target to wash trading and price manipulation. Price alone isn't what matters in manipulation of assets. Volume plays a major role, and this is what most people used to exploit heavily together with the price in crypto and other asset class as well.

[Hydrogen]

Market trading of assets are war zones. There is natural competition coupled with greed, politics and other variables.

Observed low volatility trading doesn't imply competition, greed, politics and similar factors were removed from markets. But rather that traded assets tend to reach a point of equilibrium where those factors relatively cancel each other out to produce low volatility environments.

Concepts like stability, balance and low risk are correlated with low profit potential. While instability, imbalance and high risk are correlated with a high profit potential.

In bitcoin's case it is one of few inflation protected assets, trading in an environment which could be prone towards high inflation concerns. It is also deflationary which in ways is unprecedended. It is also controversial in ways with some claiming its good for society, and others claiming its the opposite. Bitcoin is far from reaching a point of equilibrium or consensus value and so it will be traded in ways which translate to volatility.

[Baofeng]

I am wondering why Bitcoin price is much more volatile than the stock market?

It's decentralised to begin with, no central authority to control the whole ecosystem, and with a market that is open 24 x 7 x 365 it will be very volatile as there are constant buying and selling. And then we have whales and average joe traders competing against one another, so it will be a place like a battle ground so I don't think it i fair to compare it with Stock market like SP 500, it's very different.

[kawetsriyanto]

You must know all crypto coins are possible for pump-dump, not only Bitcoin.   
Well, we cannot deny that sometimes the fast moves of Bitcoin price can be caused by manipulation. But it is not always to happen, mostly the volatility occurred because of the demands in the market. Since it is a bullish trend, people very fast to make decisions, sometimes buy more and sometimes sell more. This triggers the very volatility of Bitcoin price right now.

[nitrobetting]

Volatility is usually the case with an emerging upstart market like Bitcoin. BTC price is almost entirely dependent on massive amounts of speculation demand vs. transaction demand. Most BTC holders are more interested holding bitcoins to profit off its increasing value than using it to utilize transactions.

There isn't really any value beyond its market price. Stability depends on how much adoption and overall development will progress over time.

 

[oktana]

For example, People buy it as speculative asset, so once it reaches their goal,
they sell (contributing to the volatility of the price). Based on the example I just gave,
one of the major factors that drive the volatility is the 24/7 buy and sell orders!

[just_Alice]

I am wondering why Bitcoin price is much more volatile than the stock market?

Let's just stick with Bitcoin only.  Bitcoin have a market cap close to $1T as we speak and, yet, its price is still so volatile.  Is it because the availability of bitcoins in the market is low as most people (especially the new institutional investors) are hodling? 

Is it fair to compare Bitcoin (or crypto market as a whole) to a stock market like SP 500 (which currently has $31.61 trillion market cap)?  If so, Bitcoin cap is only 3% of the SP500.  Is it because of its relatively lower market cap which make it easier for its price to be manipulated (i.e., by a pump-and-dump)?

What do you think?

I think the main reason why Bitcoin is volatile is the fact that most people buy only a small amount of btc, and, yes, probably they rarely trade with what they have partially. Those who are interested in long-term investments just hodl, and the ones who are using btc for money transfer probably sell it right away, so that the price volatility won't affect the amount they send/receive. So, as a result, only a few people (relatively to all the btc users) acquire btc in large quantities and "play with it". And when they do - it affects the price drastically, because of their large-volume transactions that account for a big part of daily trading volume.

[posi]

There are alot of factors that make Bitcoin price to be volatile but what triggers the market volatility is the level of supply and market demand for bitcoin on various exchanges (which is also what make the price of Bitcoin to be different on each exchange site), negative news which causes panic sell and the market price prediction been built on speculations (which give some influential power to manipulate the market using message/post an example is Elon).

[crwth]

As for the other members here that have posted have said pretty much it but in addition to it, I think one that highlights it primarily is that the market is 24/7. It doesn't stop and the market is all over the world, not just domestic. Imagine all around the world people are looking at the price and making speculations into what the price could be in the following days, weeks, or years. It's basically warfare in which everyone wants to have that piece of the pie. Which is money.

A lot of people take advantage of the 24/7 factor by trading it with trading bots. It makes it even more volatile because it continuously trades for the trader and just does it non-stop. It's an addition to volatility.

[dihari]

Since the first day when bitcoin start having a value, bitcoin price is drive by trust. People trust making bitcoin have a value, and that factor also drive these volatility.
But there's some other factors also impact bitcoin volatility; halving, miners, fud, news, government, and Elon.

[Silberman]

I am wondering why Bitcoin price is much more volatile than the stock market?

Let's just stick with Bitcoin only.  Bitcoin have a market cap close to $1T as we speak and, yet, its price is still so volatile.  Is it because the availability of bitcoins in the market is low as most people (especially the new institutional investors) are hodling? 

Is it fair to compare Bitcoin (or crypto market as a whole) to a stock market like SP 500 (which currently has $31.61 trillion market cap)?  If so, Bitcoin cap is only 3% of the SP500.  Is it because of its relatively lower market cap which make it easier for its price to be manipulated (i.e., by a pump-and-dump)?

What do you think?

That is without a doubt a factor but another factor has to do with the fact that there are many traders that use too much leverage, in the forex markets it is rare for a trader to go above 5x in leverage while in this market people can use as much as 100x leverage regularly, this means that when the market goes against them and their positions gets closed this reduces the price significantly and a domino effect happens making the price to go down very rapidly.

[Bitcoin Guy]

If I may summarize the most popular answers - most people think that it is the low liquidity (available circulation) and a 24/7 non-stop trading environment that are responsible for the large volatility in Bitcoin.  Of course, small market cap and price manipulation also play a part of it.

That is without a doubt a factor but another factor has to do with the fact that there are many traders that use too much leverage, in the forex markets it is rare for a trader to go above 5x in leverage while in this market people can use as much as 100x leverage regularly, this means that when the market goes against them and their positions gets closed this reduces the price significantly and a domino effect happens making the price to go down very rapidly.

How can one get 100X leverage on Cryptocurrencies market?  Do you mean by placing $100 into the investment, I can buy up to $10,000 of cryptos?

[OcTradism]

Volatility is what traders need and are looking for their tradings. Real traders can not trade if there is no volatility on the market. They can trade but they never like such market.

Volatility is not a serious problem for investors who have long term perspective for their investment.

So what does volatility mean for traders and investors? Can it cause fear on them? I guess not, only for real traders and investors. For people who self call they are trading or investing but don't know what they are doing, they have fear always.

[isaac_clarke22]

~

I am assuming aside from those three you mentioned that Bitcoin is global as well.
Many investors around the world could be throwing their money at and many could be dumping as well that's why the price is like a hell of rollercoaster ride.
This is being affected from factors like hype from media's headlines to it.
I guess it would somehow relate to the third point you mentioned though.

[CryptopreneurBrainboss]

I am wondering why Bitcoin price is much more volatile than the stock market?

Let exclude all the obvious well known feature like its finite supply, decentralized nature, more demand than supply available in the market etc that others before me must have written on and go into some simple reason why bitcoin is so volatile. Firstly it's the hottest trend in the industry, everyone and most institute wants to get their hands on some bitcoin holding which is creating more awareness for the currency.

You can't expect all these to be happening and still want the price value of the most talk about asset and currency to not be volatile. We also have the features of the market still been patronize by noobs that are yet to understand how the market works which result to them fomo or fud at every news they read or hear.

[decodx]

Yes, Bitcoin price is extremely volatile. However, if you're looking to invest in the cryptocurrency market, you should be aware that Bitcoin has had one of the best performance records in the stock market history. So, you could potentially lose your money, or make a big profit. That's a big risk, but if you are comfortable with it, it could be a good thing. But more importantly, it could be a good way to learn more about the Bitcoin economy and how to profit from it.

[RealMalatesta]

I am wondering why Bitcoin price is much more volatile than the stock market?

Let's just stick with Bitcoin only.  Bitcoin have a market cap close to $1T as we speak and, yet, its price is still so volatile.  Is it because the availability of bitcoins in the market is low as most people (especially the new institutional investors) are hodling? 

Is it fair to compare Bitcoin (or crypto market as a whole) to a stock market like SP 500 (which currently has $31.61 trillion market cap)?  If so, Bitcoin cap is only 3% of the SP500.  Is it because of its relatively lower market cap which make it easier for its price to be manipulated (i.e., by a pump-and-dump)?

I believe it's because of a simple reason - The BTC market is still new and still in propagation phase from one user to another and hence the demand in the market increases day by day. The reason you see why it drops is because there are some investors who invested early in BTC and they have the power to sell some BTC and bring the market down. Some are even playing with this kind of power, they have big amount of coins and they dump, buy at a cheaper price and then again repeat the same. It can go wrong too at times though, if the market doesn't drop as much they expect.

When we talk about stock market, because of the nature of stocks being centralized there is always a track of who holds how much and hence there is not much manipulation that can happen.

Just consider someone bought a pizza for 10000 BTC and I am giving this example just to emphasize how cheap BTC was in past and if someone by chance bought 100k BTC, they can play with the market and hence the big fluctuations and manipulations.

[Silberman]

If I may summarize the most popular answers - most people think that it is the low liquidity (available circulation) and a 24/7 non-stop trading environment that are responsible for the large volatility in Bitcoin.  Of course, small market cap and price manipulation also play a part of it.

That is without a doubt a factor but another factor has to do with the fact that there are many traders that use too much leverage, in the forex markets it is rare for a trader to go above 5x in leverage while in this market people can use as much as 100x leverage regularly, this means that when the market goes against them and their positions gets closed this reduces the price significantly and a domino effect happens making the price to go down very rapidly.

How can one get 100X leverage on Cryptocurrencies market?  Do you mean by placing $100 into the investment, I can buy up to $10,000 of cryptos?

That is exactly what I mean, there are many exchanges that offer this and this increases the volatility, this means that with a small sum of capital a trader can command and move more money than what it would be otherwise possible for him, however this is more notorious when the price goes down, have you ever wonder why the price goes down faster than when it goes up? This is because when the price moves too much downwards all of those people using leverage get a margin call and their positions get closed immediately, this means they have to sell their coins adding supply and decreasing the demand which lowers the price even more creating a chain reaction in the process.

[slaman29]

I get why volatility is not attractive for people who want to keep value and protect in in the medium and short term, but then who does that for Bitcoin anyway? Even with MicroStrategy and all those putting money into BTC, they're expecting to store it there for many years, not just a few months or even a couple of years.

Day traders and leverage traders should love BTC for this volatility too. So why all the hate?

[Sinjokubhi]

I am wondering why Bitcoin price is much more volatile than the stock market?

Let's just stick with Bitcoin only.  Bitcoin have a market cap close to $1T as we speak and, yet, its price is still so volatile.  Is it because the availability of bitcoins in the market is low as most people (especially the new institutional investors) are hodling? 

Is it fair to compare Bitcoin (or crypto market as a whole) to a stock market like SP 500 (which currently has $31.61 trillion market cap)?  If so, Bitcoin cap is only 3% of the SP500.  Is it because of its relatively lower market cap which make it easier for its price to be manipulated (i.e., by a pump-and-dump)?

What do you think?

There are a lot of things that affect the ups and downs of Crypto Asset prices, some of which are as follows:

1. Crypto Asset prices depend on the balance of supply and demand. This is the law of the market. When Crypto Asset becomes popular and there is a lot of demand, the price will go up. Vice versa, if supply is high while demand is low, the price will fall.

2. News or media coverage can affect Crypto Asset prices. For example, if there is news about hacker attacks on crypto servers, or even good news about the adoption and infrastructure behind crypto technology.

3. Crypto Asset price volatility is largely based on hype which often keeps interest high. A reliable price drop can be built on by a post on social media and the utterance of a world famous person

4. Deliberate Crypto Assets. In the field of Crypto Assets, news can really have a significant influence on the situation in the market
The amount or quantity is from the crypto assets themselves. The volume of crypto assets such as Bitcoin is still very small and the distribution is uneven so that its value will greatly support the actions of the crypto asset holders in making sales or purchases.

[batang_bitcoin]

Every market is known to be manipulated and easy to be manipulate by the whales. Comparing it with stocks and its nature of being volatile, I like bitcoin's volatility than the stocks. That's why I ponder that it is a better investment for which I'll benefit in the future and that's what's happening today and I did the right thing. Bitcoin's volatility can't be tolerated by everyone and if there are people who are good in stocks, they should stay on it.

[goaldigger]

Every market is known to be manipulated and easy to be manipulate by the whales. Comparing it with stocks and its nature of being volatile, I like bitcoin's volatility than the stocks. That's why I ponder that it is a better investment for which I'll benefit in the future and that's what's happening today and I did the right thing. Bitcoin's volatility can't be tolerated by everyone and if there are people who are good in stocks, they should stay on it.

Big investors will always move the market and that’s why Bitcoin becomes more volatile. I have to agree that Bitcoin is way more volatile and profitable compare to stocks but of course, this one will depend on the skills of every trader. There’s a lot of major factors that move the price of Bitcoin, its not just about supply and demand now, most of the time its about manipulation and the hype.

[Shasha80]

For me, the volatile price that occurs in Bitcoin is due to supply vs demand, fear vs greed and 24/7 Bitcoin trading. These three factors make
the Bitcoin price move very significantly and uncontrollably. Therefore Bitcoin trading is a very high risk activity. Because at one time we can
make very large profits, at other times we can experience huge losses. Very good strategy and analytical skills are needed to be able to read
Bitcoin price movements.

[batang_bitcoin]

Every market is known to be manipulated and easy to be manipulate by the whales. Comparing it with stocks and its nature of being volatile, I like bitcoin's volatility than the stocks. That's why I ponder that it is a better investment for which I'll benefit in the future and that's what's happening today and I did the right thing. Bitcoin's volatility can't be tolerated by everyone and if there are people who are good in stocks, they should stay on it.

Big investors will always move the market and that’s why Bitcoin becomes more volatile. I have to agree that Bitcoin is way more volatile and profitable compare to stocks but of course, this one will depend on the skills of every trader. There’s a lot of major factors that move the price of Bitcoin, its not just about supply and demand now, most of the time its about manipulation and the hype.

Bitcoin has been volatile since the day 1 with or without the big investors or those whales. It's already a character of bitcoin for which the whales have seen a good opportunity for them to make money from manipulating it. Most of them just got in when the price was already high and see how much money they can put into the market and move just as what they want to do with it. And being profitable in bitcoin, you don't actually to make yourself a trader, you just have to be good in buying and selling at the correct time and that's what's known as being a holder.

[jaberwock]

Volatility is usually the case with an emerging upstart market like Bitcoin. BTC price is almost entirely dependent on massive amounts of speculation demand vs. transaction demand. Most BTC holders are more interested holding bitcoins to profit off its increasing value than using it to utilize transactions.

There isn't really any value beyond its market price. Stability depends on how much adoption and overall development will progress over time.

I would agree to this but it then baffles me why the value of Bitcoins drops at certain times. The demand of Bitcoin in 2017 suddenly made it reach ATH and then it took 4 years to recover and double it suddenly this year. I know the value is increasing each day but what do those dumps suggest then, I wonder.

For example, People buy it as speculative asset, so once it reaches their goal,
they sell (contributing to the volatility of the price). Based on the example I just gave,
one of the major factors that drive the volatility is the 24/7 buy and sell orders!

Continuous orders happen in almost all the markets like stock market and I have done currency trading in past and there are 24/7 orders there too. I think it has more to do with the anonymous nature of Bitcoins that anyone can sell any amount without being noticed and same for buying.

It feels bad to say but a lot of people who earn black money invest in Bitcoins because they cannot be tracked.

[danherbias07]

For me, the volatile price that occurs in Bitcoin is due to supply vs demand, fear vs greed and 24/7 Bitcoin trading. These three factors make
the Bitcoin price move very significantly and uncontrollably. Therefore Bitcoin trading is a very high risk activity. Because at one time we can
make very large profits, at other times we can experience huge losses. Very good strategy and analytical skills are needed to be able to read
Bitcoin price movements.

It's the norm when you are trading.
You lose one day then you can get it back the next day.
Selling everything might be a bad idea though. I'd rather put a limit on how much I could trade.
Yes, higher profits will come to those who risk it all but what if it won't go the way on how you predicted it?
Always be prepared with the volatility. Somehow you could save all your losses by also saving some Bitcoin in your wallet.

[seoincorporation]

I am wondering why Bitcoin price is much more volatile than the stock market?

Is about the community, there are more users in the bitcoin markets than users in the stock markets... Is easy for anyone to buy bitcoin, even a kid can open an account on an exchange and buy coins with the Paypal account he uses for his games.

There are some whales and beers in the market, but take the example of Tesla... he buys 1.5B and that is less than 2% of the full market, so, bitcoin is volatile because there is a lot of people involved.

[Silberman]

I get why volatility is not attractive for people who want to keep value and protect in in the medium and short term, but then who does that for Bitcoin anyway? Even with MicroStrategy and all those putting money into BTC, they're expecting to store it there for many years, not just a few months or even a couple of years.

Day traders and leverage traders should love BTC for this volatility too. So why all the hate?

This is very common among average people, they want big profits but they do not want to understand that for that you need volatility and volatility cuts both ways, just as there can be a great growth there can be a great drop in the price as well, so I think this dissatisfaction with the volatility has more to do with the impossible goals that most people have when it comes to making money in bitcoin, traders accept the volatility and welcome it as they can make money with it, institutional investors think they can manage it and they invest in bitcoin too, but most people cannot handle it and instead of just turning their sights to other investment options they want this market changed so it fits their needs, which as we know it is impossible.

[slaman29]

Volatile is a quality that Bitcoin has. I am not very wise about this. However, it can be said that if it were not for Volatile, Bitcoin would not be so popular in the currency world today, its demand would not be so wide. Since everyone expects to profit by trading, if Bitcoin were not volatile, no one would trade here. Satoshi did not invent bitcoin or blockchain without a goal. Probably a factor as to why they're doing so poorly. In my opinion, that may be the reason.

That's what I've been saying for years and now that people are starting to whine about it again.

They loved it when Bitcoin jumped from $40k to 57k, so why should we be upset when it went down back to that levels in just as quick a timeframe? And it's back in between those ranges right now so I would be happy and take it.

Volatility makes people scared, but they forget they were excited too when they got in;)

[jostorres]

Let's just stick with Bitcoin only.  Bitcoin have a market cap close to $1T as we speak and, yet, its price is still so volatile.  Is it because the availability of bitcoins in the market is low as most people (especially the new institutional investors) are hodling? 

Is it fair to compare Bitcoin (or crypto market as a whole) to a stock market like SP 500 (which currently has $31.61 trillion market cap)?  If so, Bitcoin cap is only 3% of the SP500.  Is it because of its relatively lower market cap which make it easier for its price to be manipulated (i.e., by a pump-and-dump)?

Volatility mainly drives from being unregulated and I still think that it is a good think and not a bad thing, I believe we should probably just accept it as it is because we are profiting from it as well.

I get that people do not like it when it goes down so much so quickly, who would love to see 30% go down that is of course a bad thing for many people but we have also made 5x increase as well so if we didn't had that kind of volatility we couldn't make any profit like this neither. Long story short we are not in a bad situation with these volatile prices, we should see this as an advantage and just focus on buying more and more during drops and smiling during the bull periods .

[OcTradism]

Volatility mainly drives from being unregulated and I still think that it is a good think and not a bad thing, I believe we should probably just accept it as it is because we are profiting from it as well.

It is only existing in crypto market. This characteristic of volatility can not be found in other markets. There are circuit breaks in stock markets. The unrestricted margin of volatility for now gives us chances and risks. To get profit and reduce losses, we have to manage risks for our investments and tradings. By manage our portfolio and decentralize it.

I get that people do not like it when it goes down so much so quickly, who would love to see 30% go down that is of course a bad thing for many people but we have also made 5x increase as well so if we didn't had that kind of volatility we couldn't make any profit like this neither. Long story short we are not in a bad situation with these volatile prices, we should see this as an advantage and just focus on buying more and more during drops and smiling during the bull periods .

Make stop loss or stop limit for trades. If your position is on-going with profit but you want to take profit at higher targets, use positive stop loss for your profit. It will protect your profit and your capital. Don't be greedy and lose profit as well as capital with crash by too high volatility in crypto.

[tygeade]

Bitcoin is still a new a market and the $1 trillion achievement we have made is way less compared to the stock market. Maybe with time we will reach a higher market cap. But one thing I usually believe is that we need more retail investors than the big traders (whales) because the more that there are so many retail investors buying and selling cryptocurrency, the more it will become balanced, but when there are more of whales pumping and dumping with their billion dollars, the market will remain very volatile.

So, if we want a market that is stable, then we should aim towards having more of the smaller investors than the institutional investors. Take for example, Tesla bought $1.5 billion worth Bitcoin, what do you think will happen when they sell it? The market will drop for sure when that kind of money is removed.

[Kittygalore]

Bitcoin is still a new a market and the $1 trillion achievement we have made is way less compared to the stock market.

So, if we want a market that is stable, then we should aim towards having more of the smaller investors than the institutional investors. Take for example, Tesla bought $1.5 billion worth Bitcoin, what do you think will happen when they sell it? The market will drop for sure when that kind of money is removed.

I wouldn't consider bitcoin as new market, it has been ten or twelve years already, when are we going to stop calling it a new market, maybe its year of operation is dwarfed by stock market but I don't think that bitcoin is a new market. I do agree with you about resolving the volatility but I don't think that it will happen anytime soon, bitcoin is used by many to make profits and I think that they will do anything to have the volatility stay.

[decodx]

I wouldn't consider bitcoin as new market, it has been ten or twelve years already, when are we going to stop calling it a new market, maybe its year of operation is dwarfed by stock market but I don't think that bitcoin is a new market.
<cut>

What's different about bitcoin is that it's a completely new asset class. So, new to the market. But since the beginning of bitcoin, you could make a direct investment in the original bitcoin, the bitcoin digital currency. Of course, there is a lot of controversy. Some people say that these are two different types of bitcoin.

[el kaka22]

I believe that unregulated markets will always be volatile, because there is no stable situation in human nature, we always like to play big and make big decisions, because we do not want to make 10% per year and get rich in 30 years, we want to get rich right away today.

I also feel that way as well, if someone puts 10% of his salary into something that gives 10% profit per year for 30 years, of course depending on his salary but he will be very rich when he retires, some people work from 20 years old to 70 years old, that is 50 years, that would be insane amount of money when you retire if you are lucky. But I will be 70 years old by that time, I may have maybe 5 to 20 years at most, 90 years old people can't really do much, so I say 5 to 10 years at the very most, why be rich when I am barely alive when I can be rich a lot earlier? That is why I want to make a profit and retire before 40 so I can enjoy retirement for 40 years.

[Kittygalore]

~

What's different about bitcoin is that it's a completely new asset class. So, new to the market. But since the beginning of bitcoin, you could make a direct investment in the original bitcoin, the bitcoin digital currency. Of course, there is a lot of controversy. Some people say that these are two different types of bitcoin.

Is it still a "completely new asset class" when there are a lot of copycats called altcoins out there and twelve years has already passed? I am curious, what is this two type of bitcoin that you are talking about? And can you elaborate them with some brevity.

[Silberman]

Bitcoin is still a new a market and the $1 trillion achievement we have made is way less compared to the stock market.

So, if we want a market that is stable, then we should aim towards having more of the smaller investors than the institutional investors. Take for example, Tesla bought $1.5 billion worth Bitcoin, what do you think will happen when they sell it? The market will drop for sure when that kind of money is removed.

I wouldn't consider bitcoin as new market, it has been ten or twelve years already, when are we going to stop calling it a new market, maybe its year of operation is dwarfed by stock market but I don't think that bitcoin is a new market. I do agree with you about resolving the volatility but I don't think that it will happen anytime soon, bitcoin is used by many to make profits and I think that they will do anything to have the volatility stay.

Well, bitcoin is often compared to gold and since it has been around for thousands of years way before the modern markets were even invented I think we can still consider bitcoin as a new market despite its age, but in a way you are right, this market is finally maturing and we know this is true because institutional investors are finally getting in and it is unlikely they are coming to market that is known for its volatility thinking on selling as soon as possible, so I while I don't think we are quite there yet it is clear we are in a period in which bitcoin is slowly maturing.

[CryptopreneurBrainboss]

I believe that unregulated markets will always be volatile, because there is no stable situation in human nature, we always like to play big and make big decisions, because we do not want to make 10% per year and get rich in 30 years, we want to get rich right away today.

The regulated market is also unstable with all the rules and regulations put in place so there's no way the unregulated won't be worse than that of the regulated. The greed is the reason the market is so volatile couple with the fact, this is a very speculative market that attract lots of investors only in for the money and bit the technology.

Other market has reasons for their fundamentals to be put into consideration but that of the cryptocurency is mainly based on speculation, nobody will invest irrespective of what the fundamentals are if the price won't appreciate in the shortest time possible. That's the reason only coins that re hyped usually get the fair share of the market capitalization.

It'll be impossible for bitcoin to be stable, it could lose the heat of it's volatility  but it won't be lost completely since that's what makes the market very attractive.

[zanezane]

I am not sure as what is the major factor that affects the volatility of the prices but I think that speculation of the market prices is one of them because with speculation, trades are continuously happening which means that there is a lot of buying and selling which affects the supply and demand which is the direct reason for the prices of bitcoin which means that the more the trading volume, then the more the volatility will be. We don't have to worry about volatility though as it is present in almost any markets, its just that bitcoin market has a more prominent and noticeable price changes.

[TastyChillySauce00]

Maybe because cryptos like bitcoin are purely driven by the demand and supply it doesn't become more volatile than other asset like stocks etc. Stocks performance usually heavily affected by the company behind it meanwhile paper money affected by the government that issued the money.
But overtime if there's many crypto company out there and they are growing day by day until they reach the point where most of them could compete with the large corporations that already exist, i could imagine bitcoin and any other crypto becomes less volatile.

[imstillthebest]

The main influence of unstable bitcoin price movements is of course due to very high demand while the very limited supply of bitcoin will have a strong influence on the price of bitcoin, so in my opinion bitcoin has the potential to be very expensive because many will look for bitcoin and buy it as expensive as it is available at an exchange at a great price.

21 million supply is not Verry limited because we are talking millions not only 1 but 21 million but it looks small compare to cryptos that have a numerous billions of supply  .
it's not practical to buy Bitcoin at its Verry expensive price but practical investors are waiting for btc to go down before they start moving .
we are working smarter if we do that than buying at expensive price to think that btc will still increase . It's not working hard but is a pain in the pocket

[tvplus006]

Maybe because cryptos like bitcoin are purely driven by the demand and supply it doesn't become more volatile than other asset like stocks etc. Stocks performance usually heavily affected by the company behind it meanwhile paper money affected by the government that issued the money.
But overtime if there's many crypto company out there and they are growing day by day until they reach the point where most of them could compete with the large corporations that already exist, i could imagine bitcoin and any other crypto becomes less volatile.

One of the reasons for the increased volatility is the lack of rules in trading, when the price changes very quickly. It is possible that someday we will see the same rules that exist on the stock exchange - Limit Up/Limit Dow, when trading is suspended for 5 minutes if the price changes significantly.

[carlfebz2]

Never ever that it do happen for bitcoins price to be not volatile because even if its just starting to be trade off then volatility is already tied to it.There might be times that price is somewhat on the sideways movement
but wont still be considered on that stability side of things.

Factors that do affect volatility? Of course this talks to demand which is a casual thing plus those sentiments that circling around the market knowing that this place is highly reactive
to news and events that do happen.So better watch out.

If this place havent this kind of level of volatileness then thats already a reason on not getting that much of attention by investors.Moving prices in larger extent does have pro's.

[Hippocrypto]

I am wondering why Bitcoin price is much more volatile than the stock market?

Let's just stick with Bitcoin only.  Bitcoin have a market cap close to $1T as we speak and, yet, its price is still so volatile.  Is it because the availability of bitcoins in the market is low as most people (especially the new institutional investors) are hodling? 

Is it fair to compare Bitcoin (or crypto market as a whole) to a stock market like SP 500 (which currently has $31.61 trillion market cap)?  If so, Bitcoin cap is only 3% of the SP500.  Is it because of its relatively lower market cap which make it easier for its price to be manipulated (i.e., by a pump-and-dump)?

What do you think?

Price volatility hasn't changed for Bitcoin and also with other following coins, that continue to change everytime fluctuations happened. Manipulation? I don't think so because whales is now a part of its progressive growth. Even though we've seen some corrections but it doesn't hinder the pumps happening these days, and the community contributes on worldwide demand which is a big factor for continuing increase for its potential profit.

[lalabotax]

The main reason is that Bitcoin is decentralized, it is not a stable coin. The market really depends on the supply and demand in the market. The price will also drop and rise so significantly because f the supply and demand, also because of the fundamentals. So far, because Bitcoin is volatile, this is utilized by many crypto lovers to take profits from this by trading or even investing.

[Twinkledoe]

The main reason is that Bitcoin is decentralized, it is not a stable coin. The market really depends on the supply and demand in the market. The price will also drop and rise so significantly because f the supply and demand, also because of the fundamentals. So far, because Bitcoin is volatile, this is utilized by many crypto lovers to take profits from this by trading or even investing.

Basically, that's the answer. Driven by supply and demand. And right now, there are too much players that are into crypto. Financial institutions, top companies, miners, whales, small traders and others. It is very volatile because no one can control the market and it depends on various stakeholders. You can't get a pulse in each of them as they decide on their own. And also to add, tweets by influential people like Elon Musk, is also added factor in this game. So bit by bit, they somehow influence the market.

[taufik123]

There are 2 main factors that make the bitcoin market volatile.

The first is because the volume of bitcoins currently spread tends to be smaller. The price of bitcoin is formed by the existence of supply and demand. Many buy bitcoin while the current supply is still around 18.6 million BTC with a total supply of 21 million BTC.

The second factor that makes it volatile is that buyers who buy bitcoin are mostly traders who buy only for a short period of time to benefit from the fluctuation of bitcoin prices. There are few investors who hold bitcoin for long periods of time. Which makes prices fluctuate drastically because bitcoin trading traffic is quite dense. Panic Buy and Panic sell always occur so that prices are very volatile.

[tvplus006]

The main reason is that Bitcoin is decentralized, it is not a stable coin. The market really depends on the supply and demand in the market. The price will also drop and rise so significantly because f the supply and demand, also because of the fundamentals. So far, because Bitcoin is volatile, this is utilized by many crypto lovers to take profits from this by trading or even investing.

The capitalization of BTC is still too small to avoid price manipulation factors. After all, there are very few bitcoins on the market compared to the amount that is stored on cold wallets and, accordingly, does not participate in the exchange. Therefore, a one-time sale or purchase of a relatively large amount of BTC can lead to a sharp change in the price.

[RealMalatesta]

Maybe because cryptos like bitcoin are purely driven by the demand and supply it doesn't become more volatile than other asset like stocks etc. Stocks performance usually heavily affected by the company behind it meanwhile paper money affected by the government that issued the money.
But overtime if there's many crypto company out there and they are growing day by day until they reach the point where most of them could compete with the large corporations that already exist, i could imagine bitcoin and any other crypto becomes less volatile.

That is correct, fiat moves anyway it wants based on demand/supply but there is a government so the limit is obvious, that government will try to prevent it being worthless if they can, sometimes they fail like Zimbabwe or Venezuela but other times they manage to keep it under control even after big deals. Stocks are right too, after all we all saw that GME deal and how gamestop stocks worth from few dollars to over 400 bucks to god knows what now, it is volatile, but it is still mainly tied to company so most other stocks are not like that.

However compared to that crypto is free, there is nothing that is connected to it, there is no company, no government, no centralization, which is why it can move to 1 cent tomorrow or it could be 1 million tomorrow, all depends on what people with bitcoin and people with money decide to do with it, that is why it is so volatile.

[Silberman]

The main reason is that Bitcoin is decentralized, it is not a stable coin. The market really depends on the supply and demand in the market. The price will also drop and rise so significantly because f the supply and demand, also because of the fundamentals. So far, because Bitcoin is volatile, this is utilized by many crypto lovers to take profits from this by trading or even investing.

It is not really that hard to understand, fiat currencies are manipulated by governments so whenever there is a movement against them then governments act to protect them, this is not possible with bitcoin as there is not a central institution protecting bitcoin users from its volatility, so whenever there is a huge change in the demand the price of bitcoin reacts as its supply is low and it keeps getting lower as people are getting their coins out of exchanges, so people need to prepare themselves as the volatility is probably going to get worse.

[CryptopreneurBrainboss]

~

Of course, there is a lot of controversy. Some people say that these are two different types of bitcoin.

I am curious, what is this two type of bitcoin that you are talking about? And can you elaborate them with some brevity.

Has to be bitcoin cash, the clone now parading himself as the main deal. Most noobs that are just coming into the space and haven't taken time to familiarize themselves with the industry would mistake the cash for the real deal. For you to understand how unstable the cash is, it has already gone through another hard fork and this won't be stopping anytime soon as disagreement is bond to happen among the developers.

Bitcoin is referred to as the main bitcoin while the cash is called the fake. Don't understand why this came into the discussion but if it's related to how it has its influence on the volatality of bitcoin, I doubt the cash has a say, basically it's like every other altcoins out there bitcoin detect their price movement and not the other way round.

[decodx]

~

What's different about bitcoin is that it's a completely new asset class. So, new to the market. But since the beginning of bitcoin, you could make a direct investment in the original bitcoin, the bitcoin digital currency. Of course, there is a lot of controversy. Some people say that these are two different types of bitcoin.

Is it still a "completely new asset class" when there are a lot of copycats called altcoins out there and twelve years has already passed? I am curious, what is this two type of bitcoin that you are talking about? And can you elaborate them with some brevity.

I was referring to two of the various types of investments available on the market. The first is Bitcoin - the decentralized cryptocurrency itself, and the second is Bitcoin's futures and options.
So bitcoin futures and options allow you to bet on the direction that the price of bitcoin will move. They also allow you to hedge the bitcoin that you're already holding with other contracts. And that has allowed some people to participate in this market, who otherwise may not have. So, we need to separate these things.

[tygeade]

Maybe because cryptos like bitcoin are purely driven by the demand and supply it doesn't become more volatile than other asset like stocks etc. Stocks performance usually heavily affected by the company behind it meanwhile paper money affected by the government that issued the money.
But overtime if there's many crypto company out there and they are growing day by day until they reach the point where most of them could compete with the large corporations that already exist, i could imagine bitcoin and any other crypto becomes less volatile.

Demand and supply like you said is the only reason behind the price fluctuations because sometimes there are more than required bitcoins in the market which shrinks the price of BTC and sometimes there aren't enough BTC in the market while demand is rising that allows the pumping of BTC. and that is how I also imagine it should be but the price falling at times again makes me wonder how the supply is increasing because demand hasn't reduced for quite sometime and maybe some sharks often dump at particular prices which then gives rise to the small dips.

Like recently when Elon Musk announced Tesla's $1.5 billion worth of BTC investment, the market went up because the demand increased rapidly while the supply wasn't increasing with it.

[isaac_clarke22]

~

Speculation would cause reaction to many investors depending on what the speculation is, but that's not the primary factor in affecting the price.
Once the investor reacts, it is either selling or buying.
That's why when there are many reactions to a lower price, investors tend to take chance of buying those dumped coins.
Increasing demand while shortening the supply. That's what affects the price.

[barbara44]

I am wondering why Bitcoin price is much more volatile than the stock market?

Let's just stick with Bitcoin only.  Bitcoin have a market cap close to $1T as we speak and, yet, its price is still so volatile.  Is it because the availability of bitcoins in the market is low as most people (especially the new institutional investors) are hodling?  

Is it fair to compare Bitcoin (or crypto market as a whole) to a stock market like SP 500 (which currently has $31.61 trillion market cap)?  If so, Bitcoin cap is only 3% of the SP500.  Is it because of its relatively lower market cap which make it easier for its price to be manipulated (i.e., by a pump-and-dump)?

The both of them can’t be compared, stock has been around for years and Bitcoin is just a few years (a decade plus) so it is still growing and we don’t know where we are headed for right now, though I strongly believe that in future we are going to see Bitcoin become something really big.

When the market grows it will become stable to certain extent. Even the stock market can be volatile at times but this is something that happens at times when there is a serious situation taking place that will affect every market and push them to a particular direction, whether up or down.

[slaman29]

Speculation would cause reaction to many investors depending on what the speculation is, but that's not the primary factor in affecting the price.
Once the investor reacts, it is either selling or buying.
That's why when there are many reactions to a lower price, investors tend to take chance of buying those dumped coins.
Increasing demand while shortening the supply. That's what affects the price.

Most traders lose money and it's down to this fact, that people in there, retail ones anyway, all react when they know they're not supposed to. It even happens to big funds too since they rely mainly on individuals to broker their trades on the floor. Panic, reactions, regret, fear, bad decisions.

Buying the socalled dip isn't a great strategy for shitcoins either. Trust me, I learned this the hard way!

[AbhishekHSinghCMT]

Bitcoin never looked down once it crossed above 12k in early Oct’2020 & exploded upside in impulsive manner. Recent high-58355 will be the most watched level for next few days as momentum is not supporting the current move shown by RSI(Relative Strength Index)


Double divergence surely be one of the reason for a cautious stand in bitcoin price https://in.tradingview.com/symbols/BTCUSD/?exchange=BITSTAMP once bears take the grip & it starts falling below 54K & later 50K will be the early levels to confirm that a down leg has started & bulls have to be careful. Once 54 & 50K levels are broken - it can slip to 42K & 28-33 K would be next support which has to be reviewed later. Wave wise it could unfold as flat sequence from the tops of 58355 where wave-A & Wave-B could form a double top - a traditional chart pattern which is another important clue suggesting Bulls have to be careful & profit bookings will be the best alternative.

[Kasabus]

I am wondering why Bitcoin price is much more volatile than the stock market?

You've been here in crypto since last 2017, and that kind of volatility is already known to everyone. But just to wonder why it surprises you because we have this thing all the time and since the day it was been in the market.

Asking for a reason? There's a lot and we can't change this feature anymore. And as the number of crypto users (traders/investors) increases, the more it becomes volatile but I think, majority love to see this and this is also the reason why these people make money from here.

[Burdec]

I am not sure as what is the major factor that affects the volatility of the prices but I think that speculation of the market prices is one of them because with speculation, trades are continuously happening which means that there is a lot of buying and selling which affects the supply and demand which is the direct reason for the prices of bitcoin which means that the more the trading volume, then the more the volatility will be. We don't have to worry about volatility though as it is present in almost any markets, its just that bitcoin market has a more prominent and noticeable price changes.

Speculations with money are obviously one of the major factors but to my mind the another one major factor that stimulates all investors to buy BTC is their greed. People desire to earn more and more money so they insanely trade.

[bitgolden]

Most traders lose money and it's down to this fact, that people in there, retail ones anyway, all react when they know they're not supposed to. It even happens to big funds too since they rely mainly on individuals to broker their trades on the floor. Panic, reactions, regret, fear, bad decisions.

Buying the socalled dip isn't a great strategy for shitcoins either. Trust me, I learned this the hard way!

The weird thing is, most people who sell lose money because in the long run only the holders win money by the looks of it. How? Well let's say there are people who constantly buy and sell, and they rarely hold bitcoin, only thing they do is buy or sell and keep doing that and keep their money in fiat, and there are people who buy and hold, that means people who hold will always be in profit and people who bought and sold will be in a loss even if not real loss it would be loss or potential profit.

It is weird because it doesn't matter where you end up selling your coins, you will always make a profit, and that is why selling is a bad idea but the dilemma is that if you are never selling that means it also worths nothing as well, if I am not selling or using it, if it is just there doing nothing, it doesn't help me a bit, only if I sell. That is why I consider selling only if I have enough to become rich.

[tvplus006]

The weird thing is, most people who sell lose money because in the long run only the holders win money by the looks of it. How? Well let's say there are people who constantly buy and sell, and they rarely hold bitcoin, only thing they do is buy or sell and keep doing that and keep their money in fiat, and there are people who buy and hold, that means people who hold will always be in profit and people who bought and sold will be in a loss even if not real loss it would be loss or potential profit...

I think there are 2 reasons for this, one of which is that the trader sells BTC in the hope of buying it at a lower price and making a profit on the price difference. The second reason is that there is a lack of confidence in the stability of bitcoin and the investor is afraid of its depreciation, as it was in 2017.

[MCobian]

The factor that causes the price of Bitcoin to be volatile is because there is no regulation from the government, and Bitcoin price movements move
based on supply and demand. Which cannot be controlled, this makes the price of Bitcoin often manipulated by whales who do own large
amounts of Bitcoin. In my opinion it's not a bad thing that the price of Bitcoin is volatile, because for traders who have good analytical skills,
can take advantage of the volatile Bitcoin price to generate profits.

[lixer]

I believe that unregulated markets will always be volatile, because there is no stable situation in human nature, we always like to play big and make big decisions, because we do not want to make 10% per year and get rich in 30 years, we want to get rich right away today.

Oh well said, and I really like the word "unregulated" because once the markets are being controlled and regulated, stability is attained but the possibility of growth also reduces to a large extent. I laugh at the prospect of a government controlled crypto coin because it is more like banks moving to blockchain but still not accepting decentralization.

It'll be impossible for bitcoin to be stable, it could lose the heat of it's volatility  but it won't be lost completely since that's what makes the market very attractive.

Yes but like there are stable coins and even they have a tiny bit of volatility associated with them but it's rather negligible and I am afraid with time and more adoption we will actually lose the volatility aspect of bitcoin completely.

Once the uncertainty or volatility is vacuumed out of the bitcoin market, it just becomes the stock market.

[jack05]

Bitcoin is volatile because of its non-regulatory nature. There are many myths about volatile nature of bitcoin, one is that people who bought huge no of bitcoins in 2011-2014 are now in position to manipulate the market.

[darewaller]

If you’re going to be comparing this $1 trillion market to stock markets that are worth more than that, then you’re going to be wrong because the level at which the stock markets operates is way higher than this one. Crypto is still new, and stability is one of the reasons people wanted institutions to be part of this crypto community, and we have seen a few of them making moves to join the market by investing huge sum of money.

With time we are going to see where this leads to, whether we are going to have more of them being part of the market. MicroStrategy has been one of the institutions investing big time in the market for their rich clients. Maybe if we reach a certain level the market will stabilize.