We have heard about Bitcoin, either because of Elon Musk’s tweet or the recent rise in its popularity. But at some point, we all have heard about Bitcoin and were also curious as to whether we should invest in Legal Tender in El Salvador.
Its volatile nature can be attributed to many facts, such as it is new to the investment world, not many people know about Bitcoin correctly, and much more. But whether we like it or not, Bitcoin is here to stay. There is of course a huge rise and fall in the global crypto market, and as per the reports generated in 2020, Bitcoin and the entire crypto market are determined by speculations.
Bitcoin’s birth and the type of profit it has made:
Since its launch in 2009 to the common masses, Bitcoin has generated huge profits for people investing in it. In 2018, the price of Bitcoin was somewhere around approximately $6000 to $9000, but currently, it is approximately $43,789.10. The value of Crypto can be governed by major demand and supply mechanisms that work better in the market.
We cannot say with certainty what the reason is behind the high volatile nature of Bitcoins. Hence, we have curated a list of points that can be helpful in understanding that even though Bitcoin investment is profitable, why is it volatile?
- Total availability
It is believed that the total Bitcoins available in the market are only 21 million coins. As per the general trade rule, demand influences the price of any commodity.
We can say that the Bitcoin market is dependent on Bitcoin supply and circulations in the market. We cannot say what will happen when all the 21 million coins are in circulation, but we can say that the Bitcoin trade fluctuates due to this very reason. There are friable investors all around and you also need to safeguard your investment pattern by knowing which crypto has what future and how is there a chance of expansion and withdrawal of amount from the accounts.
- Investor market for Bitcoin
It is believed that a huge chunk of Bitcoin is with big investors. If we believe the report of the National Bureau of Economic Research, then approximately one-third of the Bitcoins are available to 10,000 investors. It is not clear, as of yet, how these investors are planning to use their cryptocurrency. Or how they are planning to liquidate Bitcoins into assets, but one thing is sure this makes the market volatile.
Imagine one day these top investors decide to either sell or liquidate the Bitcoins, whether or not it would cause a commotion among small investors. It is sure to cause commotion with the small investors as the small investors will panic and will surely start to withdraw their investments. There is extensive use of Bitcoin as a form of digital cash. Know about the companies that provide much stability to the investors. Read more about Things To Know About Bitcoin And Ethereum As A Crypto Enthusiast or Beginner.
- Bitcoin is new
As with all trading currencies, there is a lot to be learned and discovered about Bitcoins. Bitcoins are still in their initial stage, unlike their counterpart fiat currencies. As the market is small compared to the established markets of gold, even a small change can affect the cryptocurrency market in big ways.
The Bitcoin market is gaining visibility and popularity every day. With this, there is a need for proper law and regulation around the trade of Bitcoins. It is believed that with regulations, Bitcoin can attain certain stability and be less volatile.
There are also other reasons which can affect Bitcoin, such as user sentiments, laws and regulations, media influence, and much more. As it is easy to invest sometimes, we see fast investments and even faster withdrawals that can contribute to volatility. As even though the client is earning good revenue, they are still inclined to withdraw that revenue.
Conclusion:
Another factor to know here is that Bitcoins are not controlled by any government factions and are solely dependent on supply and demand. All these factors and more make Bitcoins trading volatile but profitable. In case you also want to try to earn good profits from Bitcoin trading, then the application is one advised application for it is trustworthy and deals in a lot of cryptocurrencies.
