Bitcoin’s price fluctuation is spot rate on the cryptcurrency exchanges. These are actually driven by various factors. The volatility is measured in conventional markets using Volatility Index or otherwise known as CBOE Volatility Index or VIX. Just recently, the volatility index for BTC becomes available. Called as Bitcoin Volatility Index, it’s focused on monitoring volatility of the leading cryptocurrency via market cap over different time periods.
Historically, the value of Bitcoin is so volatile. For example, in just a span of 3 months from October of 2017 to January of 2018, its price volatility peaked at around 8 percent. This is actually twice the volatility of BTC in a 30-day cycle ending on January 15, 2020. But what are the driving factors for BTC’s volatility? Let us try to figure it out in the next paragraphs.
Negative News are Automatic Rate Change
Any news events that rattled Bitcoin users may include government statements and geopolitical events in which BTC may be directly or indirectly impacted. Early adapters of Bitcoin included a number of bad actors that produce headline stories that is harnessing fear amongst investors.
All of the incidents as well as public panic ensuing the change in price of Bitcoin versus fiat currencies faster than you know. On the other hand, Bitcoin-friendly investors see these events as a strong proof that the market is gradually maturing and thus, driving the value of Bitcoin up in short time frame by simply following the turn of events.
The Way Bitcoin is Perceive
Another reason why Bitcoin might fluctuate towards fiat currencies is with the expected value of it versus fiat currencies. BTCs have properties which is almost similar to gold. It’s governed by design decisions by its developers and limiting its production to a fixed volume of 21 million Bitcoins.
Because BTC greatly differs from fiat currencies, which is centralized and managed by governments who like to maintain high employment, satisfactory growth and low inflation via investing in capital resources – as the economy built with fiat currency shows any sign of weakness or strength, investors might push on allocating more or less of their valued assets to Bitcoin.
Uncertainty of Bitcoin’s Future
The volatility of Bitcoin is driven as well by large part through varying perception of intrinsic value of digital currency as storage value and a method of transfer. Store of value is basically a function to which an asset may be used in the future with predictability. Store of value could also be saved and be exchanged either for goods or services in the distant future.
Investing in Bitcoin is indeed risk but it is justified by the rewards you can get from it. In fact, those who have done their research and real risk takers even take a secured loan near me in Florida to start investing in Bitcoin.