Why do you think Bitcoin's price hasn't stabilized yet? Is there a possibility they will stabilize in the future? Your input will be greatly appreciated. Thanks in advance.
the main reason for bitcoins price. is not about bitcoin.. its about the exchange market orderbook.
if the average investors are spending say $400 a time.. here are some situations
in 2012 that $400 bought them 66 btc ($6/btc)
in 2015 that $400 bought them 1 btc ($400/btc)
in 2022 that $400 bought them 0.01btc ($40k/btc)
but here is the thing.
its not about the supply of btc. its not even about the demand of $.. its about the spread between price orders
EG imagine in 2012 each orderline was
1btc@ $5.998 1btc@ $5.960
1btc@ $5.999 1btc@ $5.980
1btc@ $6.000 vs 1btc@ $6.000
1btc@ $6.001 1btc@ $6.020
1btc@ $6.002 1btc@ $6.040
as you can see in the left instance the price movements from buying just 5btc is just 0.066% ($0.004c movement)
as you can see in the right instance the price movements from buying just 5btc is just 1.34% ($0.80c movement)
it may not look like much on an order book. but a difference of 0.066-1.34 is a 20x difference in volatility
..
lets take 2022 prices
1btc@ $42,999.98 1btc@ $42,998
1btc@ $42,999.99 1btc@ $42,999
1btc@ $43,000.00 vs 1btc@ $43,000
1btc@ $43,000.01 1btc@ $43.001
1btc@ $43,000.02 1btc@ $43.002
as you can see in the left instance the price movements from buying just 5btc is 0.000093% ($0.04c movement)
as you can see in the right instance the price movements from buying just 5btc is just 0.0093% ($4.00c movement)
so to solve this volatility, its simple
instead of letting exchanges make orders at large gaps between the order below it. they should allow orders to be filled more closely together at sub cent increments
where orders cant be placed at huge gaps between the next price
.. here is one exageration to demonstrate
if i had an exchange with only 5 users we could collude and set our sells at
1btc@ $42,999
1btc@ $43,999
1btc@ $44,000
1btc@ $45,000
1btc@ $46,000
and make the price increase by $4k just from selling 5btc
however as demonstrated previously if there were people competing with only $0.01 increments.
5 traders can only affect the price by 4cents.. not $4000