Bitcoin's liquidity and volatility

[CryptoHeadlineNews]

When markets drop in property, stocks, forex or even altcoins - bitcoin drops. From FTX to Japan raising interest rates just a quarter of a percent. A lot of people turn their bitcoin into dollars and there's a dip.

Yes, it's true, but this is not a constant fact, which happens always that when the market drops, Bitcoin will follow sort, but rather what happens under probability, as there have been many scenarios of Global market melt down, and yet Bitcoin remains stable, which is why it's now the people's choice as the best asset for storage of long term value. Because thou volatility may occur, but yet it still has great potential when compared to others, such as forex.

[davis196]

The financial markets are made by people and people are emotional creatures(despite all their attempts to be as rational as possible).
During times of uncertainty, some traders HODL, while other traders sell. You can't change their decisions. This is what makes the markets volatile and this is what brings profits to some traders and loses to other traders. If the BTC price was stable, all the day traders and speculative investors would never pay attention to BTC. If you are afraid of volatile assets, just stick to gold or government bonds.
What are you proposing? To make Bitcoin non-liquid financial asset(make it difficult to sell BTC for fiat) so that the BTC price could always go up? Unfortunately this cannot happen in the real world.

[kryptqnick]

I don't think high liquidity is an issue. If money can't be exchanged for anything, it doesn't work as money. Money must have high liquidity, and the same is true for assets. Low liquidity poses big risks of manipulations, as well as inability to buy or sell at the alleged market price whenever one wants to do that.
Of course, high liquidity does mean that people can make split decisions to sell their coins, and that can be detrimental to the market price. But that's just the cost of freedom, and I wouldn't want it any other way. We must accept volatility as a consequence of the free market.

[dezoel]

Seems like that quote actually says Bitcoin's state as an experiment, beta or whatever hasn't changed. That contradicts your statement.

The price movement isn't a result of liquidity, or the lack thereof. The problem is that Bitcoin is quite speculative in nature and that any news, good or bad will induce traders to either purchase or sell Bitcoins. This is seen quite evidently by the policies enacted by the banks recently, or spikes and dips when regulations are being announced. Traders speculate and either purchase or sell their Bitcoins as and when they deem fit. This trend can't be broken so long as traders are treating it as a speculative asset. I don't see it as a problem that should be solved, thats a feature of the free market.

Same here. It confuses me so I read it a couple of times but something tells me that the last thing that he said is the one that is true. They must have removed it because Bitcoin is already four or five year old that time and it already starting to gain a popularity and that won't be possible if it is still in experimental mode. Liquidity is like a demand, so it actually can affect the price price of Bitcoin, making it to move upwards or downwards.

Yes, Bitcoin is speculative but I don't think it is a problem. It is normal and this is actually the reason on why it can be profitable. Trading is a quick-moving activity and it is mainly based on technical, so like you said, whatever the news are, traders can always buy and sell.

News are a part of fundamental analysis and I think the ones who mainly rely on that are the investors. I won't say that trading or speculating is just a trend but it's already a norm on this era we have now. Guess that is because the technology or the internet is only just our fingertips away.

I don't see it as a problem that should be solved, thats a feature of the free market.

Hmm.. but I thought it was a problem like you said earlier? Remember? Ah, it looks like you are also confused here just like the user you quote above, hehe.

[Zigabel]

For most of bitcoin's existence, what appears to be volatility is just the market trying to determine the price of a new asset. But even as it's become more widely adopted it seems that the biggest downward driver on price is bitcoin's liquidity.

It can be so instantly and easily turned into cash. 24x7. So anyone financially compromised turns to their most liquid asset: bitcoin.

When markets drop in property, stocks, forex or even altcoins - bitcoin drops. From FTX to Japan raising interest rates just a quarter of a percent. A lot of people turn their bitcoin into dollars and there's a dip.

Worse, because it's expected now, people sell to avoid the paper loss.

I'm interested to hear people's views on this trend and if, how and when the pattern might be broken.

And is particular, has it kept bitcoin's price lower than it otherwise would be, or are prices recoveries 'complete'?

You are right when you did said volatility is mainly the market trying to determine the price of a new asset but in the real sense its the determining of the new price of same asset and not just any new new asset, it does affect other asset sometimes but it doesn't mean its for the new asset but its mainly for bitcoin as an asset but other dependent assets do or are in a way affected by this movement and attempt to determination of price for bitcoin. 

The point at which some people do sell of their bitcoin and have to turn it out to be dollars they can spend, this helps with liquidity with which bitcoin in the long run experiences the price change both up and down which later leads to the valuing of the asset accordingly.