Why Bitcoin Vale Is So Volatile

Over the past one year, the value of bitcoin has shot up. Over the 8 years since its invention, bitcoin has stood against rejection, skepticism, and volatility until when it was finally recognized by the government and even labeled as an emerging asset class. There are many factors behind the rising trend witnessed with the value of bitcoin. It has proven to be hard to regulate the price of this crypto-currency considering that it was created to operate outside any financial companies including the banks and also the government.

·  of adoption hampered by bad press

Often news from the media about bitcoins scares bitcoin investors and potential investors too. They often talk of how bitcoin value ought to be regulated. This is one of the worst fears of already established bitcoin investors. One of the events that led to an investigation towards controlling its price is the Silk Road. This was a platform that traded on human trafficking, drugs, and much other illegal merchandise.  This and other stories are what led to drop in the value of the latter. However, this platform was sized, and the price of this crypto-currency shot up once again.

· Fluctuation of perceived value

Stored value versus the fiat currency is among the factors that lead to volatility of bitcoin. This is bitcoin has properties that make it comparable to gold. This currency is governed by a decision made by its inventors to create only 21 million bitcoins. Bitcoins are way different from the fiat currencies which are managed by the government to make sure they have contained its inflation. Because of this characteristic, investors are more likely to invest in bitcoins because they are not governed.

· Variance in perception of bitcoin

The intrinsic value of bitcoin drives the volatility of this crypto-currency because of how it is stored and transferred. Store value refers to how a specific value of an asset can be useful in the future with some predictability. The current state of the volatility of bitcoins makes the store value of the currency to become unclear. Due to this, bitcoins have a frictionless value transfer. However, bitcoin volatility based on fluctuation can still be affected by the news just like the normal currencies.

Conclusion

The kind of opportunities created by bitcoins is one of a kind and ones which never existed before the creation of the crypto-currency. Soon, it has been predicted that investors ought to drive the perception of the ability of gateways to be able to safeguard individual holdings.

2018-02-24T19:49:02+00:00
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