Why Does Bitcoin Have A Volatile Value?

Business Finance

There are a variety of factors behind the frequent fluctuations in the bitcoin value. The volatility index is the source to measure the volatility of any financial instrument. Though there is no index yet to check the volatility of bitcoin because of it being in an early stage in the asset class of instruments. But by observing the pattern of frequent fluctuation in the rate of bitcoin concerning the U. S. dollar.

Reasons for frequent changes

Though many reasons influence the rate of bitcoins, the individual impact of each aspect is quite difficult to know. To know one view or interpretation, read more.

  • Bad news scares the interested candidates: Anything, any policy change or a fall in the value, is known as bad news. Any geopolitical change in the policy or fall in the return of the investors creates a fear in the hearts and minds of the people and makes they withdrew their interests.
  • The value perceived, swings – The perceived value of bitcoins is in respect to the fiat currency. Bitcoins have the property of rare and limited stock like that of gold. It is made with the help of a clear and prior decided, design decision form.
  • Uncertainty of value – The value of bitcoin is highly uncertain because there are no indexes to major the fluctuations in them, because of the nascent nature of the bitcoins (cryptocurrencies) in the assets class, which makes the fluctuations in value nearly unpredictable.
  • The risk involved for the currency holder – If you think critically, how big a move to the market, would it be if a $10M holder would want to liquidate his currency into Fiat. Therefore, the risk of the holder of bitcoins multiplies by many levels if the idea of liquidation is removed for a while.

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