The rise and fall in the value of Bitcoin is a normal phenomenon due to its status as a young financial asset with high volatility. Volatility is explained by several factors:
1. Pricing mechanism. Due to the limited liquidity of the market, even small volumes of buying or selling have a significant impact on the price. According to the fundamental law of supply and demand, a change in trading volume (Q) causes a significant reaction to the price level (P).
2. The emotional component of the market. The dominance of retail investors causes frequent "fear-hype" cycles that amplify short-term price fluctuations.
3. The effect of corrections. As in classical financial markets, corrections are a natural part of the growth cycle. Formally, after an excessive deviation of the price from the average value (MA), the mechanism of returning to the mean level (mean reversion) is triggered:
ΔP = α(P_actual - P_mean),
where α is the correction rate.
Thus, price fluctuations are typical for Bitcoin, especially given its early stage of adoption. For long-term investors, such cycles create positioning opportunities, and for the market as a whole, a path to stabilization through increased liquidity and regulatory transparency.