The crypto world has not been stable right from the time of its inception. When Satoshi Nakamoto introduced cryptocurrency, it was volatile due to a lack of information. Further, it got recognition and started showing its volatility with the addition of millions of new investors. People started investing small amounts in cryptocurrency like Bitcoin. Your ride as a Bitcoin investor might not be easy but with a secure and user-friendly trading app like stockhax.com/compare/vanguard-vs-fidelity/, as it is a secured platform used by many investors. The Bitcoin prices at some point have been at high value and have shown volatility too but you can get a high profit if you have the right information about bitcoin trading and trends.
The marketing specialists have a few important guidelines for the investors:
- Understand the price swings that are associated with the trading of Bitcoin. It might hit an all-time high and can soon show a downward graph making it difficult to recover. It is also applicable for stocks and bonds. But, stock exchanges are regulated and controlled by the government agencies, and bitcoin exchanges are not certified and controlled by the government.
- Understand the factors that cause volatility in the price of Bitcoin and accordingly make correct use to earn profits. In this case, you need to consider several factors. For example, fake news about bitcoin can drop the price of the coin and you will face a huge loss. So, keep your eyes on the recent trends about the crypto market.
The price of the digital currency like Bitcoin might not sit still and the factors that influence the price are as follows:
The Crypto World Is Yet Not Developed Thoroughly
Definitely, the cryptocurrency market has gained popularity over the years but is still not trusted by investors. Compared to the other investment markets, the investment in Bitcoin is of a very tiny portion. People do think of investing in gold even if it is expensive rather than taking the risk in the cryptocurrency market. It is the main reason for the digital currency to remain in the developing stage.
Cryptocurrency Market Fluctuates Due To Store Of Value
You should keep this particular factor in mind as a digital currency like Bitcoin does not have an intrinsic value. There is no common point of comparison between the traditional investment methods and cryptocurrency. It has no sentimental value connected as you might have experienced in other investment options like gold. Of course, with Bitcoin, you get various options to store it online or offline but the lack of physical paperwork and regulations make it more volatile.
Bitcoin Is Purely The Digital Form Of Investment
The idea behind this new form of investment is to offer people with digital assets and has no base physical asset to measure the value. Bitcoin is one such crypto that is not backed by any physical commodity or currency. It is majorly affected by the demand and supply law and the price is not fixed. You can buy Bitcoin at a varying price depending on the number of people investing in it. Many digital platforms now have started accepting Bitcoin payments and so the rates are increasing.
Fear Is The Root Cause Of Fluctuation:
The crypto world gets badly affected by the panic caused due to any uninvited news. This is a global investment so happenings across the globe can affect the price of your crypto. It is uncertain to say anything at the time of investment and the price might either go high or fall due to fake news. Investors with higher risk would panic and start reducing their investment with any misinformation. Bitcoin is available in limited numbers and if people start selling their coins, the price will automatically go downward.
No Centralized Regulation:
The virtual currency like Bitcoin is derived from the technology named blockchain. It is not easy to copy or manipulate this technology due to its complexities. The cryptocurrency is designed in a way that it decentralizes all the regulations and no set rules can define it.
There is no fixed location of the digital currency so the regulations of any particular state cannot regulate Bitcoin. It means that Bitcoin trading cannot be controlled with any regulatory framework. This might not work in your favor every time.
