Understand Bitcoin and Cryptocurrency Volatile Market

If you take a quick look at the cryptocurrency market movement this year, it defines clearly the volatile nature of the digital currency market. Over the last decade as well, the dropping and ascending trends of the cryptocurrency market have made many people think a while about whether it’s worth investing. However, the fact is just like stock exchange, shares, etc. sharp-eyed investors look for this kind of volatility as a plus factor to groove up profit.From April to May, the value of Managing A Bitcoin Investment dropped drastically from its all-time high record of $64,000 by 50% to $31,000. As per the records of Coin Metrics, the market estimation concerning its volatility is specifically estimated based on Bitcoin value. Sometimes the drops and rise of values can be witnessed within a few hours of a day. There are several reasons which lead to this volatile nature of Bitcoin. There is always a market risk that is associated with crypto, and hence, before you take any plunge, you need to be extra careful about your monetary assets. For example, more than Bitcoins, the stablecoins have more risks and hence, if you want to invest in them, you should be very careful.

Publicity

The media plays a major role in deciding the value and volatile trend of cryptocurrency. For example, when Elon Musk announced about accepting Bitcoin as payment for their new vehicles from Tesla and plans to invest in cryptocurrency, there was a huge rush in the value of bitcoin. However, the surge was short-lived as soon Elon Musk dropped his plans for environmental reasons, as according to his research every bitcoin production consumes heavy energy.

Supply

It is a phenomenal rule around the world and in any market that the value of any product increases or drops as per its supply. When a thing has a huge supply, easy availability automatically its price drops. However, on the contrary, when there is huge demand but supply is scarce, the price increases. The same is with Bitcoin as well. with a total threshold of 21 million, the current digital currency market already has a circulation of 18.7 million bitcoin. This means that there is a huge demand for Bitcoin however the supply is limited.

Besides even in the creation process of bitcoin, earlier miners used to receive bitcoin as rewards for complicated block earnings as well as for verifying transactions to blockchains across the decentralized network. Bitcoin, for example is a type of crypto whose market rate has risen drastically over the years, and its overall value accounts for at least a major part of the digital currency sector.

Therefore, the demand for bitcoin even though on the steady rise cannot lead to an increase in its supply as described by the director of research for Fidelity Digital Assets, Ria Bhutoria.

Requirement

Although many major companies around the world like Microsoft, Amazon, Overstock, Starbucks, etc have started welcoming payments for their products and services against cryptocurrencies. However, despite that, there are many more countries that are yet to come upfront to accept cryptocurrencies. The more countries and businesses around the world start accepting bitcoin as a mode of payment, the market will have steady growth and development.

Whales

There are many accounts across the world that intentionally hold on to a major number of cryptocurrencies. When these accounts start selling out these currencies, the supply in the market enhances, which leads to a drop in value, as explained earlier. These accounts which huge hold of cryptocurrencies are termed whales.

However, as defined by the portfolio manager and founder of Quantum Economics, Mati Greenspan, “Massive retracements are always scary, but seasoned investors tend to see them as buying opportunities”. Therefore, it is true that bitcoin or the overall cryptocurrency market reflects a highly volatile nature, however, that is the nature of every market. There is also the risk of constant fear among people of losing out a huge sum of money suddenly, when they invest in crypto. Along with that, the new spending environment has also made it possible that people run away from very risky assets. This is true even for the cryptocurrency market as well. so, all you need to do is choose a reliable and customer-oriented cryptocurrency transaction platform like Bitcoin Era and start new investments or transactions in cryptocurrencies, and be a part of the future currency system.

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Scott Baber: Senior Managing editor

Manages incoming enquiries and advertising. Based in London and very sporty. Worked news and sports desks in local paper after graduating.

Email Scott@MarkMeets.com