Cryptocurrencies became popular in 2020 during a tumultuous year for the worldwide economy. Bitcoin volatility comes from its new mining technology as a price discovery enigma. No one knows for sure who invented Bitcoin.
Bitcoin value and stock market disparity fluctuate over time. Why is Bitcoin so volatile? Because it’s a revolutionary technology. All major economic transformations encounter speedbumps.
For example, the exploding marijuana industry in the U.S.
It was up against financial institutions that kept transactions illegal under federal law. Now, it’s a multibillion-dollar industry. Likewise for legal sports betting also booming in a price discovery phase.
Speculative assets experience booms and busts. Industry experts analyzing Bitcoin saw one of its most hectic months to date. The cryptocurrency bounced back 20% to about $40,000 after falling to $30,000 a few weeks ago. Bitcoin spot price reached an all-time high of about $64,000 in April 2021.
Bitcoin Value Stock Market
Economic analysts might refer to the most recent dip in the stock price of Bitcoin as a price correction. In reality, a speculative news cycle spouted from English-speaking media. China made a political decision to bar Bitcoin from its banking system.
Tesla CEO Elon Musk also altered Bitcoin tradewinds with hot-air Twitter posts. (His company would no longer be accepting Bitcoin for its products.)
These two causes of the most recent dive in Bitcoin’s stock price unleashed volatility. But China’s politburo, along with the infamous Musk, talk from both sides of their mouths.
Tesla maintains a $1.5 billion investment in Bitcoin. And a majority of worldwide Bitcoin mining comes from within China’s borders (about 70%).
Bitcoin’s recent rise in popularity grew within the framework of long-term sustainability. Independence from authoritarian regulatory oversight committees begets price fluctuations from spooks and charlatans.
Why Is Bitcoin so Volatile?
Among the most volatile crypto, Bitcoin reigns supreme. Since reaching an all-time high back in April, it lost 50% of its value before bouncing back a bit last week. Any mainstream investor would tell you that’s way too volatile.
Why do cryptocurrencies fluctuate? The short answer lies in their accessibility.
Stock markets trade during weekday sessions. Bitcoin trades 24/7, 365 days a year—all around the world.
Another aspect of Bitcoin volatility exists through its technological complexity. There’s a revolutionary appeal as an alternative to fiat currency. All cultural phenomena throughout history experienced these types of major ups and downs.
Bitcoin’s recent dive wasn’t the first time it lost half its value after reaching a monumental peak. It entered a whole new era after President Joe Biden defeated Donald Trump.
What Is the Historical Volatility of Bitcoin?
The concept of cryptocurrency originated with Bitcoin in 2009. After years of obscurity, it reached $1,000 in March 2017 (doubling its price in the next two months). By August, its share price totaled $4,000. At the end of the year, a single Bitcoin peaked at $20,000.
By February 2018, half its value eviscerated into nothingness. That slide continued into the summer, finally falling to $6,000 by June, ending the year below $4,000.
It took another year for Bitcoin to get back up to $10,000. Again, it lost half its value within the next nine months. Then Covid-19 caught the world off guard. In six months, Bitcoin doubled its value.
Between September – December 2020, it shot up to $20,000 once again. By early January, Bitcoin traded at $40,000. A few months later, it peaked.
Within weeks, half its value disappeared.
What Factors Affect Bitcoin Price?
American poet Walt Whitman immortalized himself in his work called “Leaves of Grass.” The cost of self-publishing a first edition back in 1855 came out of his own pockets. One of the most famous lines:
“Do I contradict myself?
Very well then I contradict myself,
(I am large, I contain multitudes.)”
That spirit came from a movement known as Transcendentalism. Its philosophy centered around self-reliance. About a century later, fiat currencies ushered in uniform interdependence around the globe.
Factors that affect Bitcoin price today stem from economic restraints. A cartel-like banking system dominates the world. Its subsidiaries in New York City, Washington, D.C., and elsewhere hinder autonomy.
Taking money out of that system and placing it into a whole new paradigm is revolutionary. It returns the power of wealth to self-reliant independence.
In short, speculation affects Bitcoin price. So does propaganda. To transcend a corrupt, geopolitical elite amid monopolistic crony capitalism. That affects the price of Bitcoin the most.
What Price Will Bitcoin Reach in 2023?
Bitcoin’s lofty goals come with lots of reasonable questions. In essence, that’s what cryptocurrency is all about. It comes, and it goes, and its value at times moves like a fluid rather than a solid shape.
How much is the Bitcoin price right now? As of this writing, it hovers around $37,000. Depending on who you ask or what you read, by 2023, Bitcoin might soar to $50,000 – $100,000 or more.
Bitcoin price predictions vary widely: Some foresee a dip to $20,000, while others predict $200,000 next month. Navigating Bitcoin price prediction bets can be challenging.
One major factor that could bolster the price of Bitcoin is its scarcity. Bitcoin caps at 21 million, and there are currently 18 million in existence. Another surge in price is more than possible. Some say it’s a certainty due to Bitcoin’s architecture and design. Only time will tell if that’s true or not.
Which Crypto Has the Most Potential?
When it comes to buying crypto, it’s best to consider whatever matches your investment strategy. If you’re looking to make a quick buck, then cryptocurrencies might not be for you.
You should take some time to learn about the dozens of altcoins available. For starters, PayPal allows users to buy and sell Ethereum, Bitcoin Cash, and Litecoin.
These cryptocurrencies offer beginners a perfect opportunity. Learning more about investing in new technologies can be empowering. Even Tom Brady said he’s a “big believer” in cryptocurrencies at a CoinDesk Consensus forum.
It wasn’t long ago when crypto meetings were obscure and laughable. Dogecoin began as a joke, and now it’s lauded as the perfect alternative to Bitcoin and Ethereum.
As far as crypto potential goes, that depends on the investor. You can copy investment strategies. Develop your knowledge by reading news, white papers, listening to YouTubers, etc.
Conclusion
The big takeaway from the recent Bitcoin volatility comes from external causes, whether it’s a tax season dump that long-term investors used to buy back crypto on the cheap. Or temporary economic stimulus that flooded the market in transition. One thing is clear that cryptocurrencies remain more popular than ever.
Still, there’s a lot of push and pull between investors and shady market manipulation. Bitcoin requires patience for a long-term strategy that’s only in its infancy. The growth potential outweighs volatility. Ups and downs come in cycles, like any other investment. Where some see panic and fear, others see a long-term investment opportunity.
That’s been the whole point of Bitcoin since day one.