Cryptocurrency, particularly Bitcoin, has opened up a whole new digital realm loaded with potential possibilities and opportunities. Its predictable unpredictability – the mercurial rise and fall in its value – attracts a crowd of investors willing to play the high-risk–high Reward game. But, what feeds this seemingly erratic behaviour? What determines the peaks and troughs of these digital coin values? It all drills down to volatility, a crucial factor affecting the crypto Market.
Cryptocurrency volatility is a topic that needs decoding. It’s that pivotal point that could either make you – the investor – a millionaire overnight or completely bankrupt at the same break of dawn. This report shall attempt to unravel the mystery of cryptocurrency volatility for bitcoin gambling enthusiasts and lay bare the insights stemming from knowledgeable market experts.
#Understanding Cryptocurrency Volatility
It’s no secret that cryptocurrency prices have a well-earned reputation for extreme volatility. This means that the prices of cryptocurrencies can change rapidly in a very short time, making it possible for investors to experience significant gains or losses.
Investments that are capable of delivering high returns often come with a higher level of volatility. Andrew Kiguel, CEO and Co-Founder of Tokens.com, explains, “Cryptocurrencies are indeed a lot more volatile than traditional fiat currencies. This means the price of a cryptocurrency can change rapidly in a very short time, making it possible for investors to experience significant gains or losses.”
Edul Patel, CEO of Mudrex, adds, “Crypto volatility refers to the rate at which the price of a cryptocurrency increases or decreases for a set of returns. Cryptocurrency prices are essentially speculative, and volatility is high as an asset class.”
#Triggers of Crypto Volatility
The volatility of cryptocurrencies can be triggered by a host of elements, ranging from economic to political influences. These factors can, in turn, propel significant price swings in the crypto market.
Economic factors such as the law of demand and supply, inflation rates, perceived inherent value and economic performance of a country can potentially rock the boat of cryptocurrency prices.
Justin Gillespie, CEO of Aimedis, mentions some triggers, “FUD (Fear, Uncertainty, Doubt), influence by large institutional investors, regulatory news and technological advances or shortfalls.”
Political instability, decisions regarding cryptocurrency regulation, changes in blockchain technology, market speculation, and social media hype are some non-economic factors that significantly influence the crypto market’s volatility.
#Decoding Crypto Volatility: Market Experts Weigh In
“Crypto volatility is usually driven by a combination of real-world events and sentiment about those events,” says Joe DiPasquale, CEO of BitBull Capital. “For instance, news of a country banning crypto can send prices into a tailspin, while positive news, like a big company starting to accept Bitcoin, can cause prices to surge.”
Crypto volatility can essentially lead to massive fluctuations in value and drastically affect the trading decisions of investors. “Market sentiment, news, FOMO (Fear of Missing Out) and sharp moves by ‘whales’ or large holders can cause large swings in price.” Adds Gillespie.
However, despite the high volatility and perceived risk, market experts are optimistic about the potential and future returns of cryptocurrencies, shifting the narrative towards a more positive light.
#Into the Future: Optimism despite Volatility
Despite the volatility and the risks involved, market experts continue to believe in the future potential of Cryptocurrencies.
Asim Ashraf, the founder of CryptoScores, observes, “Despite the high risk, the potential for high returns is also substantial. As more people become educated about Blockchain technology and more industries continue to adopt it, the future for Cryptocurrencies appears positive.”
And while volatility can dissuade some investors, others are attracted by the potential for significant profits, viewing the current volatility in crypto markets as an opportunity rather than a risk.
Paul Veradittakit, a partner at Pantera Capital, says, “the future is bright for cryptocurrencies, and while volatility may be part and parcel of this investment landscape, long-term trends show steady growth.”
As the world continues to witness the volatility and potential of cryptocurrencies – an integral player in the digital currency landscape – the quest for stability remains a dream yet to be achieved. Continuous education, informed decisions, and calculated risks will continue to define this digital frontier for the foreseeable future.
Sources:
Kiguel, Andrew. (2021). Interview with Tokens.com CEO.
Patel, Edul. (2021). Interview with Mudrex CEO.
Gillespie, Justin. (2021). Interview with Aimedis CEO.
DiPasquale, Joe. (2021). Interview with BitBull Capital CEO.
Ashraf, Asim. (2021). Interview with CryptoScores founder.
Veradittakit, Paul. (2021). Interview with Pantera Capital partner.
