Bitcoin Value & Prices
Why Bitcoin Value & Prices Unstable?
Bitcoin is now one of the investment options for many investors. Bitcoin prices are soaring some time this became one of the main attraction. In previous years, there has been a spike and decline in the value of bitcoin quickly. Why is Bitcoin’s price so unstable?
Volatility in the Bitcoin market does not yet have a generally accepted index because cryptocurrency as an asset class is still in its nascent stage.
Here are some of the factors that influence behind Bitcoin price volatility:
1. Greatly influenced by various news
There are many headlines in finance and finance that generate fear to investors.
Also news of the use of Bitcoin for drug trafficking through Silk Road ended with the FBI’s closing of the market in October 2013. Both incidents caused a public panic ensuring Bitcoin’s value dropped against the fiat currency (Dollar etc) very quickly.
2. The perceive value of Bitcoin fluctuates
One of the reasons why Bitcoin fluctuates against fiat currencies is perceived value versus fiat currency. Bitcoin has properties that make it similar to gold.
This is governed by the decision of Bitcoin’s core technology developers to limit production to a fixed amount of 21 million BTC.
And that, very much different from fiat currency managed by the government. The government wants to maintain low inflation, high employment, and satisfactory growth through investment in capital resources.
This is because the economy built with fiat currency shows signs of strength or weakness of a country. Investors can allocate more or less of their assets to Bitcoin.
3. Too many factors in the perception of asset value and value of Bitcoin
Bitcoin price instability is also driven largely by the various perceptions of the intrinsic value of cryptocurrency as a store of value and value transfer methods.
Bitcoin as a store of value is a function by which assets can be useful in the future with several possibilities. There are many online stores that accept buying and selling using Bitcoin.
The current Bitcoin price instability makes it an unclear added value but promises almost no frictional value transfers.
4. The value of small options for big currency investors
Bitcoin’s volatility is also driven by holders of a large proportion of total currency weakness in circulation.
For Bitcoin investors with current holdings above about $ 10 million, it is unclear how they will liquidate a large portion of Bitcoin and turn it into a fiat currency without moving the market.
In other words, every transaction made by the largest Bitcoin stockholder would be very capable of raising and lowering the price of Bitcoin.
5. News about security vulnerabilities makes investors react
This paradoxical security approach produces great results, with many valuable open source software initiatives, including Linux.
Bitcoin developers should disclose public safety issues to produce reliable solutions.
The news has some effects of falling Bitcoin value in the next month, with a decline in value of about 10% in April versus US Dollar.
6. Bitcoin and foreign direct investment in countries with high inflation
Use of Bitcoin as a valuable currency for developing countries currently experiencing high inflation if considering Bitcoin volatility in these countries versus Bitcoin volatility with US dollars.
Bitcoin is much more volatile against the US dollar than the Argentine peso that has high inflation versus the US dollar.
7. The latest big loss from Bitcoin at Mt Gox is another volatility drive.
They reduce the overall Bitcoin float by about 5%, yielding the potential of lifting the remaining Bitcoin value due to increased scarcity.
In particular, other Bitcoin providers see major failures at Mt Gox as long-term Bitcoin prospects.
8. Bitcoin’s tax imposition also affects the volatility of its price
The latest announcement by the IRS (the United States tax agency) which states that the currency is one object of tax purposes has a mixed effect on volatility.
Conversely, on the downside, the IRS’s decision to call it a property has two negative effects. The first is the additional complexity for users who want to pay via Bitcoin.