Home Bitcoin Why Is Bitcoin So Highly Volatile Yet Highly Profitable?

Why Is Bitcoin So Highly Volatile Yet Highly Profitable?

by edutechbuddy
Bitcoin

Recognized as a virtual currency, Bitcoin store is the biggest and most significant decentralized crypto currency the world has ever known. These digital currency counts on the block chain technology and cryptography. Unlike other cryptocurrencies, bitcoin is quite safe and transparent.

Though bitcoin has had a blockbuster year in 2021, during its initial days bitcoin has suffered dramatic ups and downs. Due to this extreme volatility associated with the cryptomarket, many investors prefer to stay away from bitcoins.

Though bitcoin has been ruling the market for several years now, it has undergone massive market correction a number of times. But every time, bitcoin has managed to jump to its new high after recovering from its long-term downtrend.

Bitcoin ecosystem

  • It is outright evident that bitcoin is quite volatile due to its newness. The world hasn’t seen anything like cryptocurrency before 2009 and so, it is taking a while to settle in the market.
  • Though bitcoin has risen to prominence within a few years after its inception, still has not found its feet in the asset market like other traditional assets such as equity, gold, bonds etc.
  • The bitcoin market is so volatile because it depends on influencing events, sentiment of the investors and so on.
  • You must believe that the bitcoin trading is highly speculative. Not every investor has a good understanding of the working mechanism and the rules associated with the bitcoin investment. Due to all these factors, there is abrupt volatility in the bitcoin market.
  • Another reason behind the fluctuation of the bitcoin value is the lack of controlling agency. Unlike traditional money, bitcoin is not controlled by any centralized authority and therefore, there is no regulatory framework to control the price value of the bitcoin. Due to this decentralization, bitcoin is subject to high volatility. However, the decentralized structure also turns out to be quite beneficial to the investors and enthusiasts to some great extent as they do not have to be answerable to any central body for their prevailing transactions.
  • To some extent, it has been seen that the young investors earn money quickly simply for the volatility of the market. So, when these investors lose a huge amount of money in the market, they simply quit investing in bitcoin thereby leading to a huge fluctuation in market value of BTC in the market.
  • Due to the inexplicable popularity of bitcoin, the price trend of this crypto currency is highly influenced by the demand and supply forces. As a result, you never know how the bitcoin market will behave.

Why is the bitcoin price value increasing?

Bitcoin has undergone several market corrections, recessions etc. but still the bitcoin is witnessing an unforeseen boom in the market. Lately, many well- renowned private companies are considering bitcoin as a safe haven asset. After the investment of the corporate giants in the crypto currency, many investors have started putting their faith into bitcoin and other cryptocurrencies. As a result, the price of the bitcoin has increased a bit.

  • PayPal and other American companies have launched a special feature for cryptocurrency buyers and sellers. With these companies accepting crypto currency as a mode of payment, bitcoin is more popular now and you can see it in its upward price trends.
  • Another important reason behind the price rise of bitcoin is that it features accessibility to the common people. In some places of the world, bitcoin is accepted as the legit payment method.
  • Apart from this, due to the limited upper ceiling of bitcoin, the price of this cryptocurrency will eventually increase. There can be a maximum of 21 million of bitcoin in the market Due to this growing demand and limited supply, the price of the bitcoin is bound to increase in recent future. The bitcoin has the potential to beat inflation as well.

Believe it or not, bitcoin has the potential to provide value for your money in future. It is predicted that the investors will get to see at least a surge of 20% in the bitcoin price value. So, it can be safely said that the bitcoin is a great investment vessel with immense potential for both short term and long term profit.

You may also like