If you have been following the bitcoin market, you’ve probably noticed that its volatility is a bit higher than gold and USD/EUR. That’s because Bitcoin’s price has been fluctuating between lower highs and higher lows over the past year. As a result, it shows a clear trend to the downside. As the value of bitcoin grows, it becomes more difficult to move its price as supply is limited. By 2021, it is predicted that bitcoin will have a market cap of a trillion dollars, making its volatility similar to gold.
The price of Bitcoin fluctuates due to market sentiment and speculation. The price goes up and down when the demand exceeds supply. If the supply is greater than demand, the price will decline. Conversely, if the demand is greater than supply, the price will appreciate. Bitcoin volatility is a reflection of how much investors believe in the currency’s future and what they expect it to do. This means that if the price is going down, investors are likely to be howitstart.
Whether or not Bitcoin is in your portfolio is a very good indicator of the price volatility. One year ago, the price of Bitcoin was $19K USD. In order to reach the value of $19K USD, you would need 85 percent more BTC tokens today. However, most investors only pay attention to the top lines of a price chart – the line that shows the current price and how that affects their portfolio. Bitcoin’s volatility chart displays the highs and lows, a bit like an EKG or a roller coaster.
