Overall, 2019 was a good year for Bitcoin prices. While the cryptocurrency started the year slowly with low value, it finished it off great and entered the new decade with a bang. As you’d imagine, the recent Coronavirus outbreak negatively affected the price of Bitcoin.
The cryptocurrency suffered the biggest price drop in 7 years due to the outbreak. As Coin Desk reports, the price plummeted 26% in just one day. The market cap went from $147 billion down to a mere $107 billion during that time. Since then, it went down even further, which caused a lot of concern.
Is this a make-or-break time for Bitcoin? Not really. You can’t judge the success of a cryptocurrency by its current price. We judge it by completely different standards. Today, we’re going to see what volatility means for Bitcoin and see whether it can ever become stable or not.
How Stable is Bitcoin Today?
Bitcoin’s all-time volatility is around 3.5%, which may not sound like a lot at a first glance. However, when you dig a little deeper, you realize that compared to other currencies and assets. Most currencies in the world have volatility between 0.5% and 1%, while silver and gold have a volatility of around 1%.
As we mentioned in the opening paragraph, the current crisis is making Bitcoin fluctuate up and down in price on a daily basis. Bad news and big events like the one we’re experiencing now hurt Bitcoin’s price. However, you probably already knew that if you ever dabbled in cryptocurrency.
Even smaller, headline-grabbing events have negatively affected the price of Bitcoin. Back in 2014, for example, Mt. Gox bankruptcy shocked and scared away several early Bitcoin supporters and investors. They backed off further investments and the price of Bitcoin plunged.
Are things going to become better by the end of the year? There are many perspectives on the future of the crypto market. While most experts agree that the price of Bitcoin won’t go significantly down this year, people can’t seem to agree will it be worth $5,000, $10,000 or $100,000 by the end of the year.
Why is Bitcoin So Volatile?
Big news stories and large, history-altering events affect many things, so, surprisingly, they would have an effect on Bitcoin’s price. However, that’s not the only reason why Bitcoin is so volatile. Let’s look at a few factors that have a large influence on Bitcoin’s volatility.
1. Market Manipulation
While many people like to ignore this, the fact is, price manipulation happens often in the world of crypto. There’s clear evidence of Bitcoin price manipulation happening in 2013 and again in 2017. It’s clear that this sort of manipulation contributes to Bitcoin’s volatility.