Which Factors Make Bitcoins Volatile?

Bitcoin cryptocurrency is one of the most trending topics in today’s world. People almost drool over the high-value returns that only proper Bitcoin investments can provide. But yet, everyone taking an interest in Bitcoin Hacking suffer from a common confusion and dilemma.

The volatility plays the major important role in this scenario. Every bitcoin enthusiast and investor talk and gossip about the volatility of the cryptocurrency trade market, but have you ever thought to yourself, what can be the possible reasons behind the volatility of Bitcoins?

People always believe in facts and make conclusions on their own instead of trying to reach the root cause of the problem. If you are scared of Bitcoin investments, you can know the sources of such issues from the following article and then try to solve them!

Why Are Bitcoins Volatile? Here Are Some Factors To Consider

If you are one of those Bitcoin freaks who want to invest in Bitcoins but somehow take a step back from the volatility of the trade market, then it is time for you to dig deep and discover the relevant reasons behind such fluctuations.

Here are a few reasons behind Bitcoins’ volatility:

  • Availability:

The first and the foremost reason behind Bitcoins’ volatility is the availability of Bitcoins. If you have always been interested in Bitcoins and other cryptocurrencies, you would know about the limitations of the coins.

When Satoshi Nakamoto shared the white papers of Bitcoins and launched them globally in the trade market in 2009, he announced the availability of 21 million Bitcoins only as he had programmed them that way only. Though there are several sayings behind such decisions of Nakamoto, the truth is yet to be discovered.

In the days when the trade market does not have enough Bitcoin supply, the price of Bitcoins rises to some great extent. On the other days, when there are plentiful Bitcoins available in the trade market, you would notice the price of BTC falling abruptly.

  • User and investor sentiments:

If the price of Bitcoins keeps falling for a certain period constantly, it will somewhere break the beliefs of the enthusiasts and investors. It would also affect their sentiments and emotions somehow. In such situations, the investors might suddenly stop trading and quit investing in Bitcoins.

There was a time when Bitcoins just came to the cryptocurrency trade market in 2009. In those days, the cost of one BTC was even lower than one USD. The people who took an interest in Bitcoin investments in the hope of gaining high-value claims someday had bought chunks and millions of it.

  • Government regulations:

Despite the Bitcoin trading platform being decentralized, the government of various estates tries to put taxes on the profits of investors and traders. In some cases, the government puts a surcharge of 30%, which can be extreme to bear sometimes. That is when people stop investing in Bitcoin or reduce it. It leads to a sudden downfall in rate due to the ample supply of Bitcoins in the trade market.

If you look at the positive aspects of government regulations, you will find several cases where the Government body legalized the use of Bitcoins in various fields and companies. Such events gave rise to the value of Bitcoins due to high demand in the cryptocurrency trade market.

  • Media hype:

The Bitcoin cryptocurrency trade market is volatile and very much sensitive to news. Today’s world mainly focuses on news and gossip from various social media platforms. There are times when the media starts spreading rumors or irrelevant information on the media platforms to get better TRP and popularity. In those days, several crypto enthusiasts and investors sell off their virtual assets to fear losing everything at a considerable loss and leaving the market. If the media stays affirmative regarding Bitcoins, the market value stays stable or rises high; on the other hand, when they spread false news, the market value drops down.

Final Words

You can consider the above points to be the main reasons for the volatile Bitcoin market. However, if you are searching for a trading platform to invest in Bitcoins, Bitcoin Era might be the right fit.

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Steve has been living in Saudi Arabia since 2013 and writing about Saudi rules, regulations, guides, and procedures since then.