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Why is Bitcoin price so volatile?

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Bitcoin cryptocurrency volatility is the outcome of finite supply and the absence of a central bank. Bitcoin as a concept may have been conceived a decade ago, but many of its features are in a nascent stage. Bitcoin is in a price correction stage. Coin Metrics data revealed that the price of bitcoin cryptocurrency tanked by 30% and stood at $30,000. The number two cryptocurrency Ether also did not fare any different, sank 40%, and even touched $2,000. Both the top cryptocurrencies made amends and gained substantially at the close of the day.

The limited supply of Bitcoin and the lack of a central bank is the price that consumers have to pay by dealing with volatility. However, this is precisely what gives value to bitcoin, and its value is closely related to its scarcity. The maximum threshold of Bitcoin is 21 million, and already there is 18.7 million bitcoin in cryptos currency commerce

Bitcoin’s volatility causes are many

Many events contributed to the high price swings of bitcoin. A few days ago, China cracked its whip on banks completing crypto transactions. Tesla also declared that it would not accept Bitcoin as a currency for payment of its wares. Elon Musk’s tweets led to a record surge in the values of cryptocurrency.

Still, his later advice to investors to exercise caution meant that the market is actually in a correction mode. Therefore bitcoin’s volatility can be better termed as the market setting things right and making amends to a past mistake.

Bitcoin Technical Setup

The largest crypto asset of the world after facing significant selling pressure is now trying to recover from the strong support zone. Presently, Bitcoin is slipped below all vital moving averages (MA) of 20, 50, 100 and 200-Day. The digital asset is trying to rebound from the support zone of $29,000 to $32,000 and facing minor resistance of short term moving averages of 20 and 200-Day.  

Bitcoin over the monthly chart experience less volume action and also falls below the average line and needs to improve sharply. Whereas, the closing of day candles above 200 and 20-DMA will give confidence to bulls. Interestingly the dominance of Bitcoin is at 41.6% and it opens door for Alt-coins to grow well. 

Altcoin Performance 

  • Ethereum (ETH): Ethereum has outperformed after a much awaited breakout; it created the New all time high of $4360, but the selloff in the broader market pulls it to $1735 low. 
  • Binance (BNB): Like other crypto asset Binance coins also experience a sharp profit taking and plunges almost -42% from the ATH of $690. 
  • Dogecoin (DOGE): The meme coin DOGE plunged around -48% from the highs of $0.73 to $0.21; However, recover sharply and CMP at $0.38. 
  • Cardano (ADA): cardano coin looking strong among all top crypto assets and still looking positive as it holds all vital moving averages.  
  • Ripple (XRP): Ripple coin also witnesses a sharp downtrend after creating its new 52-week highs of $1.96 to $0.65. However, now XRP has recovery and is trying to hold $1.00 mark.

Bitcoin volatility-Dissecting the semantic word

The past week was very intense for the cryptocurrencies market. The surge was massive, and the fall equally dramatic. This process of surge and fall continued with remarkable regularity. Mati Greenspan, portfolio manager and founder of Quantum Economics sees an opportunity in the present situation. The changes in cryptocurrency values can be healthy if the surge or the decline is steady and within a broad range. Healthy volatility is like a double-edged sword and could be beneficial for a market and create profit opportunities.

Opportunities for investors

Seasoned investors lapped up the massive fall in bitcoin’s values as buying opportunities. Is there a Bitcoin Volatility Index? The increase of decrease in the value of as financial asset is known as volatility. In other words it also means the rise or fall of the value of an asset over a period of time. Volatility also increases the cost of hedging. If bitcoin’s volatility tanks, so will the cost of selling or buying Bitcoin. Today, Bitcoin Volatility Index is measured using the standard deviation of daily returns for the preceding 30- and60-day windows. All the volatility benchmarks of the number one cryptocurrency are based upon past performances. As the crypto coin market matures , it will be possible in future to predict Bitcoin’s forthcoming volatility, which is in many ways a better measure.

Is Bitcoin volatility going down?

Bitcoin volatility was very intense in the past. In 2012 Bitcoin values surged by 50% in each incidence of a spike. In 2013 the surge ran at 30% in every instance of Bull Run. However, things settled down from2014 onwards, and today, BTC values tend to surge and fall between 4% and 10% when the volume is high and moves between 2% and 5% when the volume is low.

Why is Bitcoin’s volatility shrinking?

Bitcoin’s volatility is going down partly because there is increasing adoption among investors, The Bitcoin trade is undergoing a sea change, and the market is slowly evolving and becoming mature. Still, Bitcoin’s volatility remains higher than gold, oil, U.S. stocks or emerging currencies. However, the gradient is getting flatter and therefore, the economic features that can get Bitcoin into the financial mainstream are brighter today.

As Bitcoin’s riff-raff get smaller, crypto investors dub it as signs of recovery

Most crypto investors see the present reduction in price swings as a sign of recovery. BTC was trading at $36,425 as of 6:45 a.m. in New York. Despite the preparations of U.S. financial authorities to play a more proactive role in the crypto trade, Bitcoin’s 10-day volatility was reduced back to 106% from a high of nearly 162% on May 24.

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