Volatility of bitcoin

[Publictalk792]

Volatility is very common because the price depends on its demand. Many times it is seen that the price of Bitcoin is increasing and sometimes its price is decreasing. Due to the limited supply, the buying pressure of investors often increases, which at one point increases the price of the coin in a large scale. Sometimes, when there is various types of negative news, the selling pressure increases, which reduces its demand, due to which the price is slightly downward. But there are many investors who have been accumulating Bitcoin for a long time. They are regularly increasing their holdings of Bitcoin. Again, sometimes the pressure from institutional investors increases, due to which it becomes expensive again. This will continue. Its price will continue to rise and fall on demand.

You rightly summarized the key idea of supply and demand of rare asset. Reason behind price change is that fixed and limited supply means that any steady increase in demand will make price to increase and this demand is usually due to long term buyers who are always increasing their amount, and this fact helps to raising price much. But, price decreases slightly when bad news causes more people sell but price soon goes up high again as large financial groups begin to buy in big amounts. You are quite correct that this push and pull will always continue, and price will go higher and lower with changing demand, against few coins in use.

[BlackBoss_]

Price of Bitcoin is unstable since, as opposed to steady coins, which are tied to real US dollar, BTC is not tied to anything and its value simply moves according to desire of people to pay in new market.

Fiat currencies are stable in prices as $1 is $1 over time but people must know a big hidden fact about fiat currencies, their purchasing power actually decreases with time. So, when you look at fiat currencies this way, do you still think their stability is good for your wealth?

Bitcoin price is volatile, it's truth, but its price has increased with time and its purchasing power rises with time too. These rises of price and purchasing power is strong and comes from its high value. Bitcoin is volatile but it is better for people wealth than fiat currencies.

Its main reason for instability is that its supply is fixed and rare, having just 21 million coins, so any small change in number of people who want to buy or sell it results in huge and sudden price rise. News and market excitement and big trades by large investors can also easily change price, as market is still smaller than others. And new government rules can lead to instant, hard to guess changes.

Reasons are not from its 21 million bitcoins total supply as you can see other altcoins that have limited total supplies, even 21 million coins or even smaller than 21 million coins.

How is the 21M bitcoin cap defined and enforced ?

[Minor Miner]

Bitcoin being  volatile  is  not  only  an hinderance and uncertainty in trading it also gives opportunities  for  enhancing and adoption of new strategies. But how exactly  is bitcoin  volatile.  I know what volatility  means but i still don't  understand  the reason  why price is not stable and why its not like othe pegged  coins.

In my opinion the real reason for Bitcoin's volatility is that no one controls it. No government or no company. That is no one can keep the price at bay. Only supply and demand determine the price in the market and since people's sentiment changes very quickly, the price also jumps accordingly.

Another big thing is that pegged coins have clear support behind them, such as a dollar reserve, they deliberately keep the price stable. Bitcoin has no backup, no one says that the price will be at this price today. So it's all about who wants to buy or sell at what price in the free market, my personal opinion is that Bitcoin's identity lies in its volatility. It is risky but that risk makes people think, makes them look for opportunities.

Bitcoin is not the only asset/investment, other financial assets/investments such as gold, real estate or stocks are also volatile. So it cannot be said that bitcoin's volatility is due to it being a decentralized asset.

Apart from fiat-pegged assets, the volatility of other assets is determined by supply and demand. And besides supply and demand, other factors that cause price fluctuations are market psychology, money flow or manipulation.
Bitcoin is more volatile than other assets because it is a relatively new market, cash flows are not yet stable, and people tend to invest more in the short term than the long term. This makes prices fluctuate quite strongly in the short term and difficult to predict.

[tottong]

Bitcoin being  volatile  is  not  only  an hinderance and uncertainty in trading it also gives opportunities  for  enhancing and adoption of new strategies. But how exactly  is bitcoin  volatile.  I know what volatility  means but i still don't  understand  the reason  why price is not stable and why its not like othe pegged  coins.

Volatility is inseparable from the ups and downs that occur, which can trigger rapid price movements or even reverse them. However, when you consider why people prefer volatile assets over some other available coins, you begin to realize that Bitcoin is one of the best.
If you understand volatility, it shouldn't be difficult to understand why Bitcoin's price is unstable. If the price is stable, Bitcoin wouldn't be considered a highly volatile asset, and that would make you appear to not understand the meaning of volatility.

In terms of its implementation and its journey, there's no hope of seeing Bitcoin stabilize because this asset is quite volatile, and that's also one of the reasons why many people are attracted to investing because of the potential for large profits.
Limit your own risks so that involvement in Bitcoin can provide a path to financial freedom, as this is a viable option.

[nemesis_incarnate]

You rightly summarized the key idea of supply and demand of rare asset. Reason behind price change is that fixed and limited supply means that any steady increase in demand will make price to increase and this demand is usually due to long term buyers who are always increasing their amount, and this fact helps to raising price much. But, price decreases slightly when bad news causes more people sell but price soon goes up high again as large financial groups begin to buy in big amounts. You are quite correct that this push and pull will always continue, and price will go higher and lower with changing demand, against few coins in use.

Diamond hands know for a fact how most of the people treat their coins and holdings - they don't see the broader picture, and may panic sell or so on, whereas their goals will be achieved through the others (unfortunately).

[MusaPk]

Volatility is inseparable from the ups and downs that occur, which can trigger rapid price movements or even reverse them. However, when you consider why people prefer volatile assets over some other available coins, you begin to realize that Bitcoin is one of the best.
If you understand volatility, it shouldn't be difficult to understand why Bitcoin's price is unstable. If the price is stable, Bitcoin wouldn't be considered a highly volatile asset, and that would make you appear to not understand the meaning of volatility.

In terms of its implementation and its journey, there's no hope of seeing Bitcoin stabilize because this asset is quite volatile, and that's also one of the reasons why many people are attracted to investing because of the potential for large profits.
Limit your own risks so that involvement in Bitcoin can provide a path to financial freedom, as this is a viable option.

It's due to volatile nature of Bitcoin that we are seeing it's price at 90,000$ after touching it's ATH of 126000$ few weeks ago. The volatility associated with Bitcoin has it's own benefits. There are investment options which are risk free and give you fixed return like the money saved in banks. The downside of such schemes is that the value of your money depreciates with time. While if you invest in Bitcoin then value of your stored Bitcoin increases after every 4 years. This is not a theory but we have seen that happening with people who have invested in Bitcoin for long term.

[aylabadia05]

Bitcoin being  volatile  is  not  only  an hinderance and uncertainty in trading it also gives opportunities  for  enhancing and adoption of new strategies. But how exactly  is bitcoin  volatile.  I know what volatility  means but i still don't  understand  the reason  why price is not stable and why its not like othe pegged  coins.

Bitcoin's limited supply is a reason for price volatility. The bottom line is that the quantity of Bitcoin is limited, and this refers to the basic theory of supply and demand, market sentiment that influences investors' confidence due to news reports, and trader activity that prioritizes the short term. Because full control does not lie with a third party, this is still possible. In the long term, historical data shows that Bitcoin tends to rise rather than fall.

[nemesis_incarnate]

Bitcoin being  volatile  is  not  only  an hinderance and uncertainty in trading it also gives opportunities  for  enhancing and adoption of new strategies. But how exactly  is bitcoin  volatile.  I know what volatility  means but i still don't  understand  the reason  why price is not stable and why its not like othe pegged  coins.

Bitcoin's limited supply is a reason for price volatility. The bottom line is that the quantity of Bitcoin is limited, and this refers to the basic theory of supply and demand, market sentiment that influences investors' confidence due to news reports, and trader activity that prioritizes the short term. Because full control does not lie with a third party, this is still possible. In the long term, historical data shows that Bitcoin tends to rise rather than fall.

Also it's the fact that everybody is pulling in BTC - big and small.

Everybody waited for so long that they see only now what may be done with BTC.. And everybody wants a bit of it.

[Ayers]

Bitcoin being  volatile  is  not  only  an hinderance and uncertainty in trading it also gives opportunities  for  enhancing and adoption of new strategies. But how exactly  is bitcoin  volatile.  I know what volatility  means but i still don't  understand  the reason  why price is not stable and why its not like othe pegged  coins.

Bitcoin's limited supply is a reason for price volatility. The bottom line is that the quantity of Bitcoin is limited, and this refers to the basic theory of supply and demand, market sentiment that influences investors' confidence due to news reports, and trader activity that prioritizes the short term. Because full control does not lie with a third party, this is still possible. In the long term, historical data shows that Bitcoin tends to rise rather than fall.

More precisely, the Bitcoin supply combined with unstable demand has caused strong short term volatility. Limited supply will not create volatility if demand is steady.

Moreover, that is not the only reason. Market sentiment, liquidity and especially high leverage are the top causes of bitcoin volatility. As we all know, every time the market fluctuates, billions of dollars are liquidated. Most notably, the flash crash on October 10th caused the largest liquidation in the market and by many estimates could have been as high as $200 billion, not $19 billion.

When someone says bitcoin is volatile, they are talking about the short term. However, if we look at the big picture and zoom out, we will only see one thing, bitcoin always increases over time.

[Satofan44]

Fiat currencies are stable in prices as $1 is $1 over time but people must know a big hidden fact about fiat currencies, their purchasing power actually decreases with time. So, when you look at fiat currencies this way, do you still think their stability is good for your wealth?

Bitcoin price is volatile, it's truth, but its price has increased with time and its purchasing power rises with time too. These rises of price and purchasing power is strong and comes from its high value. Bitcoin is volatile but it is better for people wealth than fiat currencies.

Fiat currencies are NOT stable, stop spreading this misinformation. You contradicted yourself within 3 fucking sentences you dimwit. If fiat currencies are stable in prices as "$1 is $1" then so is Bitcoin, because 1 BTC is always 1 BTC. There is no argumentation line that shows Bitcoin in a negative spot light compared to fiat currencies, so stop writing this nonsense.

Apart from fiat-pegged assets, the volatility of other assets is determined by supply and demand. And besides supply and demand, other factors that cause price fluctuations are market psychology, money flow or manipulation.
Bitcoin is more volatile than other assets because it is a relatively new market, cash flows are not yet stable, and people tend to invest more in the short term than the long term. This makes prices fluctuate quite strongly in the short term and difficult to predict.

How many times do I have to repeat this? Every pegged asset is volatile too. There exists no asset or currency that is not volatile. How can you people not wrap your heads around this, even a child could understand this? If I issue an asset that is Bitcoin pegged, does that mean now that the asset is not volatile?   Simultaneously, whether fiat-peg, gold-peg or whatever-the-fuck-peg it is going to be volatile. If you don't have the knowledge to see where the volatility is, this is a reflection of your stupidity and not of a lack of volatility.

There are investment options which are risk free and give you fixed return like the money saved in banks.

Nonsense, there is no such thing as a risk-free investment. Everything has risk.

[aylabadia05]

Bitcoin's limited supply is a reason for price volatility. The bottom line is that the quantity of Bitcoin is limited, and this refers to the basic theory of supply and demand, market sentiment that influences investors' confidence due to news reports, and trader activity that prioritizes the short term. Because full control does not lie with a third party, this is still possible. In the long term, historical data shows that Bitcoin tends to rise rather than fall.

Moreover, that is not the only reason. Market sentiment, liquidity and especially high leverage are the top causes of bitcoin volatility. As we all know, every time the market fluctuates, billions of dollars are liquidated. Most notably, the flash crash on October 10th caused the largest liquidation in the market and by many estimates could have been as high as $200 billion, not $19 billion.

I didn't mention market sentiment, liquidity, and high leverage as causes of Bitcoin volatility because I believe others will add to it.
All of that is true, and I agree that it's the main cause. Yes, the recent flash crash caught many people by surprise, especially those trading with short-term targets.

When someone says bitcoin is volatile, they are talking about the short term. However, if we look at the big picture and zoom out, we will only see one thing, bitcoin always increases over time.

Over the long term, Bitcoin has never disappointed. That's why many experienced investors never panic but instead smile during a market downturn. Generally, they are the most relaxed people in various market conditions.

[Finestream]

Bitcoin being  volatile  is  not  only  an hinderance and uncertainty in trading it also gives opportunities  for  enhancing and adoption of new strategies. But how exactly  is bitcoin  volatile.  I know what volatility  means but i still don't  understand  the reason  why price is not stable and why its not like othe pegged  coins.

As explained already, the volatility of Bitcoin can't be stopped, and it continues behaving the same. But why do we have to worry about it? Of course not, because due to its volatility, we know that Bitcoin is not just a simple coin created but a valuable one. It can make someone earn money and become profitable, but it could also lose our money if mistaken.  There is no need to duel and ask why and why…it is created with such behavior for a bigger reason that most of us never see.  If it is not highly volatile, only a few people show interest in it, while the majority ignore it.

[nemesis_incarnate]

Bitcoin being  volatile  is  not  only  an hinderance and uncertainty in trading it also gives opportunities  for  enhancing and adoption of new strategies. But how exactly  is bitcoin  volatile.  I know what volatility  means but i still don't  understand  the reason  why price is not stable and why its not like othe pegged  coins.

As explained already, the volatility of Bitcoin can't be stopped, and it continues behaving the same. But why do we have to worry about it? Of course not, because due to its volatility, we know that Bitcoin is not just a simple coin created but a valuable one. It can make someone earn money and become profitable, but it could also lose our money if mistaken.  There is no need to duel and ask why and why…it is created with such behavior for a bigger reason that most of us never see.  If it is not highly volatile, only a few people show interest in it, while the majority ignore it.

It's more a feature than something that we need to worry about.

We just need to learn to maneuver it properly and use it to our advantage.

[BIT-BENDER]

Bitcoin being  volatile  is  not  only  an hinderance and uncertainty in trading it also gives opportunities  for  enhancing and adoption of new strategies. But how exactly  is bitcoin  volatile.  I know what volatility  means but i still don't  understand  the reason  why price is not stable and why its not like othe pegged  coins.

Bitcoin is not like other pegged coin because it is not a stable coin, stable coins are those coins pegged to the Fiat like US dollar, I believe that you already know some examples of stable coin.
But your question is strange because are you asking why Bitcoin is not like other coins that is pegged or asking how Bitcoin is volatile, honestly you don't even know what you want to ask and you should do more research to ask constructive questions.

[henry_of_skalitz]

Bitcoin is not like other pegged coin because it is not a stable coin, stable coins are those coins pegged to the Fiat like US dollar, I believe that you already know some examples of stable coin.
But your question is strange because are you asking why Bitcoin is not like other coins that is pegged or asking how Bitcoin is volatile, honestly you don't even know what you want to ask and you should do more research to ask constructive questions.

I would just add up in what way volatile regarding BTC is not understandable by the OP?

It's not like there aren't enough coins to see basically the same thing in different iterations..

[Smartprofit]

Bitcoin being  volatile  is  not  only  an hinderance and uncertainty in trading it also gives opportunities  for  enhancing and adoption of new strategies. But how exactly  is bitcoin  volatile.  I know what volatility  means but i still don't  understand  the reason  why price is not stable and why its not like othe pegged  coins.

Look at the situation from the miners' perspective. What's simply speculation or investment for people like us, for miners is a business (or more accurately, a production activity). 🤌

The Bitcoin algorithm stipulates that the cost of Bitcoin mining doubles every four years. Furthermore, miners must upgrade their production facilities at least once every four years (buy new ASICs). 🎛️

Miners incur expenses for electricity, ASICs, and rent. They are forced to pay all these expenses in fiat currency. And to do this, they must periodically sell the Bitcoins they mine, preferably at a high price.

Given all these circumstances, the price of Bitcoin simply cannot be stable relative to fiat currencies.

[Baki202]

As explained already, the volatility of Bitcoin can't be stopped, and it continues behaving the same. But why do we have to worry about it? Of course not, because due to its volatility, we know that Bitcoin is not just a simple coin created but a valuable one. It can make someone earn money and become profitable, but it could also lose our money if mistaken.  There is no need to duel and ask why and why…it is created with such behavior for a bigger reason that most of us never see.  If it is not highly volatile, only a few people show interest in it, while the majority ignore it.

The volatility of Bitcoin is only part of the system, and for does that are trading Bitcoin already know how these things work. And exactly this is nothing to worry about because from the way it looks, no matter the price you buy, even if it's the dip, the price is designed to usually go up and then come down, but as it is now, when you know about bitcoin, then everything becomes easier because things like this will not be strange and you will even be comfortable with it.

And there are people who are always panicking when it comes to the price dipping, the best thing they feel they can do is to sell, but that is like the worst decision they can make. Instead of them buying more and holding, they are scared of losing money, and no matter what, their money will still come back to normal.

[Yorubek]

As explained already, the volatility of Bitcoin can't be stopped, and it continues behaving the same. But why do we have to worry about it? Of course not, because due to its volatility, we know that Bitcoin is not just a simple coin created but a valuable one. It can make someone earn money and become profitable, but it could also lose our money if mistaken.  There is no need to duel and ask why and why…it is created with such behavior for a bigger reason that most of us never see.  If it is not highly volatile, only a few people show interest in it, while the majority ignore it.

The volatility of Bitcoin is only part of the system, and for does that are trading Bitcoin already know how these things work. And exactly this is nothing to worry about because from the way it looks, no matter the price you buy, even if it's the dip, the price is designed to usually go up and then come down, but as it is now, when you know about bitcoin, then everything becomes easier because things like this will not be strange and you will even be comfortable with it.

And there are people who are always panicking when it comes to the price dipping, the best thing they feel they can do is to sell, but that is like the worst decision they can make. Instead of them buying more and holding, they are scared of losing money, and no matter what, their money will still come back to normal.

Of course, there are many new investors who get disappointed when the price of Bitcoin falls and quickly sell their Bitcoins, thinking that the price will not increase anymore and will only decrease gradually. In reality, the price of Bitcoin decreases, but in the long run, its value increases. Despite the decrease in Bitcoin price, those who buy with confidence and hold it for a long time will benefit in the future. Bitcoin prices fluctuate rapidly, but no one knows for sure when the price will decrease or increase. I think that when the price decreases, a new investment opportunity is created, so it is better to buy Bitcoin with confidence and hold it patiently without getting disappointed.

[BtcAnalyst1]

Bitcoin being  volatile  is  not  only  an hinderance and uncertainty in trading it also gives opportunities  for  enhancing and adoption of new strategies. But how exactly  is bitcoin  volatile.  I know what volatility  means but i still don't  understand  the reason  why price is not stable and why its not like othe pegged  coins.

Volatility is the same on all market, whether stock, commodity, foreign exchanges others, it is commonly a situation with high levels of  market uncertainty, FOMO( fear of missing out), speculations, and above all, it is a conditions where demand and supply principles are playing on the markets within some periods. It is also explain as a periods of rapid and unpredictable price swings.

[Bushdark]

Bitcoin being  volatile  is  not  only  an hinderance and uncertainty in trading it also gives opportunities  for  enhancing and adoption of new strategies. But how exactly  is bitcoin  volatile.  I know what volatility  means but i still don't  understand  the reason  why price is not stable and why its not like othe pegged  coins.

Volatility is the same on all market, whether stock, commodity, foreign exchanges others, it is commonly a situation with high levels of  market uncertainty, FOMO( fear of missing out), speculations, and above all, it is a conditions where demand and supply principles are playing on the markets within some periods. It is also explain as a periods of rapid and unpredictable price swings.

It is true that people want to make money from volatile market and that is what has been responsible for different reasons why people want to invest in the market while their money starts reading very fast. If the stock market stops moving in liquidity this will change the mindset of investors because people want to make money quickly without waiting too long to see the results of their investments. If the liquidity is not enough some investors may not wait too long before removing their money to invest in some other market that will give them profits quickly within a period of space.