Happycoin.club - Bitcoin continues to amaze with its unpredictable price changes. At the time of its creation, its value was equal to a few cents, and in March of this year it reached an all-time high of almost $74,000.
This long journey has been marked by extreme volatility, with fluctuations sometimes exceeding 80%. Understanding the volatile nature of Bitcoin is critical to the success of investors and analysts as it helps provide insight into the future of cryptocurrencies.
Bitcoin's volatility is due to a variety of factors that are part of the characteristics of a very young digital currency. Unlike traditional assets that have a centuries-old history, Bitcoin and the cryptocurrency market as a whole do not have established market dynamics.
Currently, due to manipulation, its value is regularly revalued by the market, leading to large price fluctuations in response to new information and events.
One of the fundamental factors influencing the volatility of BTC is its limited supply of 21 million coins. The increasing coin shortage is exacerbating price fluctuations, especially as demand from retail and institutional investors rises.
Additionally, the influence of large investors, commonly referred to as crypto whales, further exacerbates price volatility. Their significant assets allow them to influence market dynamics with large buy or sell orders, which also leads to sharp price changes.
And here it is worth mentioning the relative immaturity of the cryptocurrency market infrastructure and liquidity problems, so any large transactions will certainly affect market prices. Lack of liquidity can increase price fluctuations as investors maneuver in and out of positions.
It was believed that the emergence of Bitcoin derivatives in the form of spot ETFs and the development of market infrastructure could make the trading process more stable. In the meantime, we are seeing sharp jumps due to large inflows and outflows of funds.