Bitcoin, being the most popular option in the online trading platforms is known for the perks that it provides to its users. Its usage is not only limited to trading, but can also be used for shopping and peer-to-peer transfer of money. Fortunately, even after being volatile; it is considered to be profitable to invest in Bitcoin. Do you know why? Here is the answer……
Volatile Nature of Bitcoins
Volatility refers to the fact of fluctuation of the value without any prior information. To be precise, the value of the Bitcoin goes up and down quite often. Hence, as an investor; you must be mentally prepared to come across any situation. You may come across a lucrative profit percent or a big loss. When getting started with Bitcoin investment, it is advised to start with small amounts of investment.
When it comes to any sort of financial investment, any type of investment is, no doubtrisky. Whether it is cryptocurrency or any precious metal! It is all about the time of making the investment and situation of the market that makes a difference. Buying and selling at the right time according to the favorable position will help in making the most out of the investment. The more you study about the market, easier it will become to make the best investment decision.
Why ? Here Are Some Reasons
As an investor, you must be wondering about some of the vital reasons that contribute in the volatility of the Bitcoin. For your kind information, it is nothing surprising.
Its market has remained highly volatile since its inception in 2009 and it persists even today. Some vital factors that result in determining the trajectory situation of the market include the following:
- Emerging of the market – The market of Bitcoin is aIs Bitcoin So Volatile highly emerging one that is gaining rapid popularity. Also, it is facing disillusion among the investor enthusiasts. It is miniscule in comparison to traditional currencies including gold.
Smaller forces holding large number of coins may easily influence the trade market. Selling of the Bitcoins will help in crashing of the entire market.
- Bets that are speculative – No doubt, the market of Bitcoin thrives entirely on speculation. The market price value of Bitcoinscan go up or down anytime without any prior notice. It may help in achieving high level of profit.
Such random speculations result in influx of the money without any prior notice. It also results in high level of volatility of the cryptocurrency.tra
- No backing of any physical currency – Bitcoin and other cryptocurrencies being pure digital assets get determination about the price in terms of supply and demand at Bitcoin Era. Moreover, there remains no involvement of physical commodities.
Thus, due to no presence of any stabilizing factor, the overall outcome is none other than random going up and down of the price. Unlike other investment options, it is not at all backed by any government body.
- A highly developing technology – Bitcoin technology is an evolving technology. Since its inception, it is undergoing several changes.
The existence of scalability problem is one more factor that results in fluctuation of the market price. There are times when the smart contract is not at all validated within the expected time frame. Hence, it creates in sudden downward pressure.
- Flimsy investors –Unlike other markets including stock market, the Bitcoin market hardly sees any expertise. Almost every financial investor chooses Bitcoins these days to invest their money in.
Some investors take an entry hoping to come across quick gains as well. The moment the motive does not get fulfilled; frustration seems the final outcome. As a result, many of them withdraw. Such frequent investment and withdrawal also result in high volatility of Bitcoin.
Finally, at the end of the day, every Bitcoin trader should be well aware of the fact thatthe Bitcoin market is highly volatile. Still, if you are successful in keeping yourself up-to-date with the latest trends in the market and the right time to buy or sell coin; then nobody will be able to bar you from being a successful Bitcoin investor.