Why is Bitcoin so Volatile?

This is a question that many have been asking and it is worth looking into. Bitcoin is basically a form of currency but only work or can be transacted through complex blockchains. However, it is so volatile due to a number of factors that we are going to look at.

Reasons why Bitcoin is so volatile

From the beginning, bitcoin has a bad image and the rate at which people embrace it has been jeopardized by the bad image. In most countries, the government of the day have expressed their concern over the impacts of the growing rate of use of bitcoins. With that there have been a tug of war between the developers, the users and the government. The government has used a regulatory measure which has hampered the stability of bitcoin usage. This is basically one of the answers why bitcoin has been so volatile over the years. In the recent years, the FBI has been known to shut down a number of market places with an allegation that bitcoins were being used in paying for dangerous drugs and weapons.

Secondly, bitcoin values have been fluctuating and it has been difficult for the users to predict it. Just like gold, the value of bitcoins can be regulated by those who govern the flow and the inflow of it. Now with this, it means that its usage or transaction can be regulated each and every time. The developers of the blockchain technology have powers to limit how bitcoin users transact using bitcoins. When that happens, many investors will allocate their assets to bitcon and the amount of bitcoins in circulation certainly fluctuates.

Thirdly, you might have heard about a confusion between store of value and the actual type of value associated with bitcoin. The variance of its intrinsic value is what has been making bitcoin value so volatile. The volatility is basically accrued from the store of value and the method of value as far as buying and selling of bitcoins is concerned.

Fifthly, the negative news associated with bitcoin breach of security has always rattled investors to a point where their reaction exposes the bitcoin community to security threats. The holders of large amounts of bitcoins have also jeopardized security for those that hold less amounts of bitcoins. This is simply because large shareholders decide on the directionality of the value of bitcoins.

Leave a Reply

Your email address will not be published. Required fields are marked *