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Why Is Bitcoin’s Price So Volatile?

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Why Is Bitcoin's Price So Volatile

(CTN News) – There is no doubt that cryptocurrency is a volatile business.

Your analysis of cryptos is incorrect if you think it is a short-term investment and a fast track to wealth.

Earlier this week, cryptocurrencies collapsed. Recently, Bitcoin has gained ground.

Cryptocurrency is a roller coaster ride. It has high peaks and dramatic falls.

“Massive retracements are always frightening, but seasoned investors tend to see them as buying opportunities,” said Mati Greenspan, portfolio manager and founder of Quantum Economics.

Why is Bitcoin so volatile?

The reason Bitcoin is volatile is that it is influenced by feelings and projections, says Nathan Reiff.

According to Reiff, bitcoin’s price fluctuates due to demand and supply, investor sentiment, government regulations, and media hype.

Price volatility is caused by all of these factors working together.

As an example:

-China has cracked down on banks completing crypto transactions.

-Tesla will not accept any more crypto transactions as a payment method.

-The crypto market was altered by Elon Musk’s tweet.

Three factors alter the value of cryptocurrencies and the willingness of investors.

The main clue to volatility resides in the supply of the asset and the lack of central bank control.

It is the lack of control from a central entity that crypto developers say adds value to all assets. But it is also a curse.

“No central bank or government can step in to support or prop up markets and artificially subdue volatility,” said former Fidelity Digital Assets researcher Ria Bhutoria.

Cryptocurrency’s volatility is a tradeoff for a distortion-free market.

Bitcoin’s time of existence is another reason why it is so volatile. Bitcoin has 13 years of life left, it is a young asset that needs more time for analysis.

Even though a company that went public yesterday does not have any history, it can at least be evaluated based on its business prospects, earnings, and cash flow,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, said.

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