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

[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.

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[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.