Why is Bitcoin’s price so volatile?

[aysha9853]

Volatility comes from price discovery Bitcoin has no central authority setting value, it’s purely supply and demand miners, long term holders, traders, funds, all have different goals, when those interests collide, price moves.

[Lock_Tightt]

Interesting topic, OP. Are you asking from a trading perspective or just general curiosity? Volatility affects hodlers, traders, and miners differently, so the “why” can have multiple layers.

So we can safely say, since there is only a limited amount of Bitcoin, and people want things that grow in value, Bitcoin is likely to be worth more in the future. Right? That's what I'm trying to figure out. It's basically logic.

[CryptoBuds]

If the price of Bitcoin was not volatile, then Bitcoin would not have attracted investors. So when Bitcoin was created, these things were pre-planned so that it could attract the attention of investors and create a hype worldwide. And Bitcoin has been able to do this, which is why Bitcoin is now a digital currency discussed in the whole world that everyone trusts and invests in large amounts. Bitcoin's volatility can be called its religion. Not only Bitcoin, but every coin in the crypto market, except for a few stable coins, is volatile and this is why you yourself are thinking about Bitcoin and are interested in investing here.

I agree that if Bitcoin weren't so volatile and didn't generate such huge returns, it wouldn't attract investors and wouldn't have reached its current position. But I don't think these things were planned before Bitcoin was created. Satoshi created Bitcoin as a peer-to-peer currency, he had no intention of turning it into a speculative asset. The volatility of Bitcoin is due to us, the early investors, instead of using Bitcoin for Satoshi's original purpose, we turned it into a speculative asset.

Bitcoin's volatility cannot be called a religion, because as Bitcoin matures over time, its volatility will decrease. It won't be as stable as stablecoins, but it will be as less volatile as gold at some point.

[Livingleged]

Bitcoin is often described as a long-term store of value, yet its price frequently moves sideways or declines for extended periods. In principle, buyers and sellers generally avoid transactions that intentionally reduce value, since buying/selling at a lower Bitcoin price weakens perceived value and harms both parties. the seller says “I will not sell any amount, even 0.00000001 BTC, for less than $1.43 per BTC.” the buyer buys what they can afford. Given this, what factors cause Bitcoin’s price to fluctuate - aren't there always buyers at the standard market price?

I think it is safe to say that the reason for the fluctuations of bitcoin price is not but the the factor that is called supply and demand dynamics. Although there might be other external factors affecting it but that the major player in maintaining bitcoin price.

If the players holding bulk bitcoin are refusing to sell making it very scarce you expect the price to bull, same applies when player are selling the coin they have in possession maybe due to speculation or some form of government restrictions then the price bear.

That is just it most time the price is moved as a result of news headlines and speculation which causes panics and it drives players to sell there coins.

[headingnorth]

Re: Why is Bitcoin’s price so volatile?

The answer is very simple but hardly anyone ever thinks about it.

Bitcoin is highly volatile because people are buying it purely on speculation.
You are not buying a physical product or service. You are buying bitcoin simply to gamble on the price.

When someone buys an Apple Macbook for example they are not buying it because they expect the value to go up so they can sell it at a profit.
They are buying it because they need to use it for school or work. So they are basically HODLing it forever. That is what keeps Apple's stock price
very stable and not very volatile. You are not buying an Apple cellphone or computer to speculate on the price.

But with something like bitcoin and crypto people buy it with the purpose of selling it back within a few days, months, or years after the price
has gone up high enough for you, or you panic sell at a loss. That makes bitcoin and crypto extremely volatile.

I think people like Jack Dorsey recognize these limitations which is why he says to be successful in the future bitcoin
needs to be widely adopted as a payment method and commonly used as much as people use their credit cards and debit cards.
Because then you are using bitcoin for more than speculation. That is what Satoshi originally intended for bitcoin to be.

But who knows if it could ever happen.

[justdimin]

what factors cause Bitcoin’s price to fluctuate - aren't there always buyers at the standard market price?

Have you ever seen in any market where there would be always enough buyers for higher than what sellers are offering. It means the lower prices are being bid by the buyers and the sellers are quoting higher than that which is the reason only on demand the price match (or the actual trade) happening and the market moves up or down. When market mechanism is like this, how you could expect buyers all the times for all the price level. There are buyers in every market but they are demanding lower prices than what sellers offering which may lead market to fluctuate.

Bitcoin market movements are mostly speculative where long term price movements are driven by fundamentals of bitcoin whereas for short term, micro economic news are impacting.

[viljy]

The short answer to your question from the headline of the thread is so that interested parties can make money from it. The fact is that bitcoin is currently exactly the same volatile speculative asset as other assets. Of course, one can believe that someday this situation will change and bitcoin will have an almost stable price, maintain value and possess all the other charms that are potentially seen in it. The price is supported, among other things, by such faith.

But not everyone believes it. Otherwise, how can we explain why the "ancient" bitcoin holders sell bitcoin from addresses that have not been touched for a decade? Moreover, these people are clearly not poor and do not need money (otherwise they would sell bitcoin not only near ATH). Why do these billionaires prefer dollars now rather than bitcoin later? That's exactly why, to capitalize on the volatility now, while faith supports the price. Well, such cycles are periodically repeated and will be repeated.

Why did Michael Saylor call bitcoin's volatility a blessing (maybe not literally, but that's the meaning)? Because that's the way it is for those who want to make money from it.