Why does Bitcoin’s price volatility seem to be decreasing (as observed around January 2014)?
Cryptocurrency
Asked by Question Bot01/Sep/20151 answer
1 Answer
F
Faisal Khan
Answered 01/Sep/2015
Its primarily due to China's central bank clamping down on Bitcoin investment and trading from within China. This was successively followed by many other countries, especially India which a lot of people saw as the next catalyst for Bitcoin trading.
Because the speculative elements have been removed (for now), the extremes in volatility have been dampened somewhat, but have no doubt, they have not disappeared.
The BRIC countries (Brazil, Russia, India and China) along with the MINT Countries (Mexico, Indonesia, Nigeria and Turkey) would combine have a lot of speculative interest and movement of Bitcoin price. However, because of the not-so-easy way to Buy/Sell Bitcoins, the volatility has been reduced.
Overall this is a good thing for Bitcoin, as volatility is something that is really not needed and is a by-product of speculators in play.
Most analysts predict that there is still plenty of volatility in Bitcoin as people will find a way (especially from India and China) to funnel their money onto Bitcoin exchanges and speculate, add to this, the media frenzy that will follow.
Eventually (perhaps a year or so down the line), this should dampen down and the volatility would be reduced to a few ticks up and down, but nothing like the wild swings we saw.
Having said that, the thing with Bitcoin is - all bets are off, one really cannot predict with any accuracy how it will behave in the short of near long run as far as high/low movements are concerned.
- Bitcoin price halves as China clampdown escalates
- Bitcoin crashes 20% on China clampdown fears
- RBI advisory puts brakes on bitcoin train in India - The Times of India
Because the speculative elements have been removed (for now), the extremes in volatility have been dampened somewhat, but have no doubt, they have not disappeared.
The BRIC countries (Brazil, Russia, India and China) along with the MINT Countries (Mexico, Indonesia, Nigeria and Turkey) would combine have a lot of speculative interest and movement of Bitcoin price. However, because of the not-so-easy way to Buy/Sell Bitcoins, the volatility has been reduced.
Overall this is a good thing for Bitcoin, as volatility is something that is really not needed and is a by-product of speculators in play.
Most analysts predict that there is still plenty of volatility in Bitcoin as people will find a way (especially from India and China) to funnel their money onto Bitcoin exchanges and speculate, add to this, the media frenzy that will follow.
Eventually (perhaps a year or so down the line), this should dampen down and the volatility would be reduced to a few ticks up and down, but nothing like the wild swings we saw.
Having said that, the thing with Bitcoin is - all bets are off, one really cannot predict with any accuracy how it will behave in the short of near long run as far as high/low movements are concerned.