Two Factors That Can Ensure Stability in the Price of Bitcoin
In the real scheme of things, bitcoin will struggle to gain the dominance it promises in the financial markets if it continues to be so volatile.
Since the great bitcoin rally in late 203 that brought the cryptocurrency to the limelight, things have been relatively quiet for the digital currency. In fact, in January of this year, bitcoin fell to a two-year low of about $214, down 71.14% from its all-time high hit in November 2013, according to CoinDesk BPI exchange.
However, since the two-year low in January, the digital currency has risen by 191% to around 623.24. For one, such a large swing in price shows how volatile the price of bitcoin is. Wall Street analysts believe that equities are the riskiest class of assets. But we can all agree that bitcoin is riskier.
In the real scheme of things, bitcoin will struggle to gain the dominance it promises in the financial markets if it continues to be so volatile. It simply just needs to be a whole lot more stable than this. During the great recession, the ‘most volatile’ equites didn’t even display the level of volatility that bitcoin is exhibiting. For instance, from November 27, 2007, when markets analytics firm Ycharts marks as the beginning of the recession, the S&P 500 fell only 50% to the lowest point that the recession saw.
One thing that keeps things in check in the equities market is the fact that there are a lot of strings attached to the market that prevents the market from over reacting to every bit of event. Some of these include the Federal Reserve, interest from powerful folks around the work – the wealthy – trading volume, the strength off the economy, to name just a few.
This post was published at NewsBTC on 8:19 am September 12, 201.