INSUBCONTINENT EXCLUSIVE:
In December 2020, Bitcoin was trading around $20,000 (roughly Rs
In January this year, it crossed $40,000 (approximately Rs
Continuing its bull run, it reached an all-time high of $65,000 (roughly Rs
Then in May, it crashed and throughout June it stayed below $30,000 (roughly Rs
The coin began rallying again around July 20 and surpassed $45,000 (roughly Rs
33.42 lakh) last week for the very first time in almost three months
Similarly, most other popular cryptocurrency coins have behaved over the past few months
While this has resulted in a windfall for some, some others might have likewise lost a part of their financial investments due to the high
volatility in the cryptocurrency market.The one concern most uncomfortable to a majority of financiers is: Why is cryptocurrency so
volatile? The cryptocurrency market has actually been volatile from the beginning however the last couple of months have actually been
There are a few aspects that figure out the trajectory of this market.Emerging MarketCryptocurrency is still an emerging market, gaining
rapid popularity as well sustaining quick disenchantment among investors
Despite all the media attention, this market is still minuscule when compared to traditional currencies, or perhaps gold
This indicates even smaller forces-- a group of people holding big quantities of crypto coins-- can affect the trade
Even if they sell just Bitcoins, it would be enough to crash the whole market.SpeculationThe cryptocurrency market thrives on speculation
Financiers wagered that the costs would increase or go down to make profits
These speculative bets cause an abrupt increase of money or a sudden outgo, causing high volatility.Purely Digital AssetMost
cryptocurrencies, including Bitcoin and Ether, are purely digital properties with no support of any physical product or currency
Which implies their price is identified entirely by the laws of supply and demand
In lack of any other stabilising element, like federal government support, any number of reasons might lead to a variation in need or
supply.Developing TechnologyThe blockchain or other alternative technologies on which these coins function are still developing
It has just been a years because the Bitcoin concept was first proposed
There is the scalability issue, when a clever agreement is not confirmed with the timeframe expected, creating abrupt down pressure.Fragile
InvestorsUnlike realty or the stock exchange, this market is not viewed as requiring knowledge
So mostly part-timers are investing in it
They come with a hope of making fast gains however often when that does not take place, they lose perseverance and withdraw from it
This regular participation and withdrawal also result in volatility.
