Traders are always concerned about ‘Bitcoin’ volatility. It is important to know what makes the value of this particular digital currency be highly unstable. Like many other things, the value of ‘Bitcoin’ also depends on the rules of demand and supply. If the demand for “Bitcoin” increases, then the price will also increase. On the other hand, the decrease in the demand for ‘Bitcoin’ will lead to a decrease in demand. In simple words, we can say that the price is determined by how much it is agreed that the oil market pay. If a lot of people want to buy ‘Bitcoin’s, then the price will increase. If more people want to sell ‘Bitcoin’s, then the price will fall.
It is worth knowing that the ‘Bitcoin’ value can be volatile compared to the most established products and currencies. This fact can be credited to its comparatively small market size, which means that a smaller amount of money can change the most prominent ‘bitcoin’ price. This inconsistency will be reduced naturally during the passage of time as the currency is developed and the size of the market grows.
After being disturbed at the end of 2016, ‘Bitcoin’ played a new high-level record in the first week of the current year. There could be several factors that make the ‘Bitcoin’ be volatile. Some of these are discussed here.
The bad press factor
The users of ‘Bitcoin’ are scared mainly by different news events, including the statements of government officials and geopolitical events that “Bitcoin” may be possibly regulated. It means that the ‘Bitcoin’ adoption rate is concerned about negative or negative press reports. Different bad news created fear of investors and forbade them from investing in this digital currency. An example of bad news of headlines is the eminent use of ‘Bitcoin’ in the processing of drug transactions through the Silk Route that came to an end with the FBI stoppage of the market in October 2013. This type of Stories produced panic between people and caused the ‘Bitcoin’ value to decrease enormously. On the other hand, veterans in the commercial industry saw negative incidents as evidence that the ‘Bitcoin’ industry is maturing. Then, the ‘Bitcoin’ began to obtain its greatest value soon after the effect of the bad press vanished.
Fluctuations of perceived value.
Another great reason for the value ‘Bitcoin’ to become volatile is the fluctuation of the perceived value of the ‘bitcoin’. You may know that this digital currency has properties similar to gold. This is issued by a design decision of the Central Technology creators to restrict its production to a static amount, 21 million BTC. Due to this factor, investors can assign less or more active in ‘Bitcoin’.
News about security violations
Several news and digital media agencies play an important role in the construction of a negative or positive public concept. If you see that something is announced advantageously, it is likely to go because of that without paying close attention to the negative sides. There have been news about the security gaps of ‘Bitcoin’ and really made investors twice before investing their hard earned money in the ‘Bitcoin’ trade. They become too susceptible when choosing any specific “Bitcoin” investment platform. ‘Bitcoin’ can become volatile when the ‘Bitcoin’ community discovers safety susceptibilities in an effort to create a great open source response in the form of security corrections. Said safety concerns give birth to several open source software, such as Linux. Therefore, it is recommended that ‘Bitcoin’ developers must expose security vulnerabilities to the general public so that strong solutions.