Why Bitcoin is so Volatile

It was in the year 2009 when bitcoin was made publicly available. Gradually, it started gaining popularity, and by the end of the year 2010, it was the talk in the financial domain. However, for a brief period of time, bitcoin had to pull out of the market, as there are a couple of modifications that had to be made to the system.

One of the major drawbacks that bitcoin had was the fact that it didn’t offer significant safety and security features. For example 1kdailyprofit, there was double-spending issue which can hack your account. However, after a couple of years, they modified the system and reintroduced it with blockchain as the backbone. 

One of the key features of bitcoin is the fact that it is very volatile in nature. There are multiple different factors that influence the price of bitcoin. If you’re planning to trade in bitcoin, you must have some basic ideas about such crypto currencies. As long as you know what affects the rise and fall in the price of bitcoin, it would be easier for you to make decisions on investment. You can also visit to know more about Bitcoin investment and its price change.

Few factors that are responsible for high volatility of crypto: 

There are many factors that contribute to the sudden fall and rise in the price of bitcoin. There are a couple of crucial ones.

  • The availability of a number of bitcoin in the market is one of the key reasons that determine the price. More bitcoins available means that there are chances that the price might fall. On the other hand, the price of bitcoin will be increased when there is enough supply of such coins available.
  • These days, companies from all over the world have invested in billions to acquire bitcoin. The amount invested in bitcoin can also determine the value of Bitcoin.
  • Supply and demand, which are the two major aspects of economics at the reasons for so much of fluctuation in bitcoin price. With increased supply, the demand falls, and as a result, the price comes down. On the other hand, when the supply of bitcoin reduces, it triggers an increase in demand, which automatically leads to a hike in price.

These are the three major reasons that have made bitcoin is a volatile asset. However, for those who are planning to trade in bitcoin, they can keep their eyes on the recent trends to save their funds. As long as you have the right approach, you would succeed. Like in any other trading, when it comes to bitcoin, it is important that you have a strategy in place. You can either opt for dry trading, trend trading, or bitcoin hedging. All these are different kinds of mechanisms that are used to formulate a strategy and ways to trade with bitcoin.

As mentioned, the market of bitcoin is a very volatile one. One moment you might find that the value of bitcoin has skyrocketed, the next moment it has fallen drastically. Therefore, before making investments, you need to be sure about the chances of profit. As a beginner, it is always advisable to limit your investments that can be adjusted even if you have sustained a loss.

It is important to know your limits: How far would you go with your investment? This is a very important question that needs to be answered. As mentioned, as a beginner, if you’re planning to invest a considerable amount of money, in that case, there are chances that you might face severe losses. Therefore, to begin with, try and restrict yourself within a reasonable limit, no matter how provocative it might be. These are a couple of important aspects that you need to know if you’re planning to trade with bitcoin. 

Besides, there are other areas like market trends, the graph of the price of bitcoin, and the ability to figure out the right time to invest, which are some of the crucial aspects which you need to be aware of. Indeed, trading in bitcoin can be a very lucrative proposition, but you can add other crypto currencies and tokens to your portfolio to keep your funds safe. 

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