The Value Of Bitcoin Is Extremely Volatile; Find Out Why With Us
Bitcoin is an extremely volatile currency with dramatic highs and surprising lows, which has the ability to shake the digital gurus’ pocket every now and then. What is it exactly that affects the price of Bitcoin?
Given the short period of time, Bitcoin has created waves in all major financial markets. Uncertainty, coupled with the overwhelming feats the currency has achieved makes Bitcoin a one of a kind investment, intriguing developers with altcoin projects, aimed at rivaling the giants.
Dive into the volatile value of Bitcoin right here, and discover potential opportunities in the market for that perfect crypto investment.
Decoding The Animal Spirits
The term “Animal Spirits” in market play, refers to the investor as an emotional being that is driven by his or her own theory, as opposed to cold hard facts and analysis. This can be a simple hunch, or a rumour that ultimately affects the investor positively or negatively.
These effects drive investor sentiment, which in turn affects the price of coin. Being emotional creatures, we are persuaded by what we see in the media, positivity breeds positivity and negativity can play a part in any market taking a dive.
Media coverage influences price of coins
The media has a large role to play when it comes to the price of Bitcoin. It’s not just Bitcoin that is affected. Any new technologies that are exciting and inventive are usually surrounded by a massive hype, which can drive the price of the technology up.
On the other side of media coverage, when Bitcoin is the victim of bad press, the price can be driven down. Bad press events like governments making statements relating to the regulation of Bitcoin,or geopolitical events instil a fear in the investing public, ultimately decreasing the price of the stock.
Political risk is always a price factor
Political ongoings around the world will always influence the markets. An example of this is the economic crisis that Greece endured in 2015. Greek residents turned to Bitcoin as a more stable solution for their hard earned money. As a result, Bitcoin trade remained stable for the majority of the year, even if the value didn’t increase, it shows that the currency was able to handle shocks in the market.
Another controversial example of political events influencing the price of coin is the referendum for Britain to leave the European Union, which occured on the 23rd of June 2016. The Pound was losing value at a rapid rate since May, while Bitcoin started to soar, and increased by over 65% in value.
A handful of large holdings increases volatility
There are a handful of Bitcoin investors with stocks in excess of ten million dollars. This makes Bitcoin a volatile stock. It’s left up to the imagination as to what might happen should the investor decide to sell off the coin and flood the market. Large sums of coin entering the market may decrease the price or we may just see a stable growth rate for Bitcoin.
Bitcoin like any stock is a healthy mix of volatility and reward. Cryptocurrency is definitely making waves in the financial market. You simply must ask yourself why it seems like most markets and investors, no matter what, back Bitcoin as a future currency that is here to stay.