Analyzing Bitcoin’s price volatility impact on the crypto industry
Price volatility continues to be a part of the crypto-economy, with no specific prediction about its conclusion. As for BTC, volatility is evident from the most recent numbers, wherein the token has slipped way below the expected mark of $30k. BTC was dancing around $65,000 in 2021, which is nearly 2 years ago. Now it is nowhere near the halfway figure.
Another way to understand the volatility of BTC is to look at its lowest figure of $20,358.70 in the last six months. That stands true for March 9, 2023. Has it affected any other sector? Yes, the entire crypto industry and, most importantly, the operations of betting sites.
Factors That Contribute To Bitcoin’s Inherent Volatility
There are a total of six factors worth examining to understand why the BTC ecosystem is volatile. These are related to government regulations, market sentiments, liquidity, media influence, global economic factors, and speculative nature.
Market Sentiment
Market sentiments are either bullish or bearish. Bullish means that traders expect the price to fetch better profits in the future. Bearish is the exact opposite of that; traders estimate losses on their investments. Both terms have been handpicked from the traditional financial market. Investors with bullish sentiments are likely to put more trust and, hence, more funds into the market. This puts the price on the rise.
Lack Of Regulation
Regulators across the world have to take responsibility for providing clarity in the crypto industry. Traders are confused by the absence of regulations, which fuels their concerns that the investments are not secure because regulators do not govern them.
Liquidity
Traders feel safer when they know that the funds can be withdrawn at any moment. Considering the previous point, traders need to know if their funds are secure or not. If not, then there has to be a way for them to retrieve their investments to avoid losing the funds.
Speculative Nature
Drawing a trajectory based on past performance is worth noting. However, speculation can lead to the downfall of the token, with the fall often spreading to the entire industry. Users with less knowledge tend to speculate that the market is bound to perform poorly when the price goes down. Such a trend sees a rebound as most of the traders have lost their funds by then.
Media Influence
Media plays a huge role in driving the crypto market. A problem arises when the basics do not back the reporting. For instance, a media platform is rolling out a piece stating that the fall in the crypto market is only because of an international war. While it is likely to be a part of the problem, claiming that this factor propels the market on its own diverts attention away from the larger issue.
Global Economic Factors
These include allowing cross-border transactions or hosting a foreign platform in the country for its residents. Inflation and recession are the two most common factors that drive the crypto market. The recession period is when people are likely to take fewer risks. So is inflation since necessities become more important than keeping funds aside for investment in digital assets.
Comparison Of Bitcoin’s Price Volatility To Traditional Financial Markets
Volatility is part and parcel of the cryptosphere. There are predictions that it will eventually take a back seat as trends become clearer. Also, many countries have started giving cryptocurrencies legal status or are in the process of regulating them for their citizens.
For instance, the US is leading in terms of ownership percentage at 14.36%. Vietnam has surpassed them in recent months with an ownership of 21.19%. India is leveraging its economic power to lead the race.
They still fall behind traditional financial markets because they have been in existence for a much longer time. Also, people trust the traditional system more than the newly launched decentralized network hosting digital tokens with restricted utilities.
Crypto Sports Betting And Volatility
In an interesting take, it has been observed that the crypto sports betting market is helping drive the volatility factor of BTC. This is based on the simple idea that players hold the digital token if they have better prospects of betting those funds on the platform. Some of the best Bitcoin sports betting sites are driving the adoption of the token by rolling out exclusive promotions like the first deposit bonus and the BTC deposit bonus.
Seeing the promotions on the internet, players are instantly driven to add BTC to their wallets and use them for sports betting on crypto sports betting platforms. Such an increase in the holding expands utility and, thereby, the price and volatility.
Future Outlook And Maturation
Digital tokens are starting to take their respective places in the world. BTC is seen as an alternative to investing in gold. ETH is being utilized to make payments and settle other transactions on online markets. Similarly, other cryptocurrencies are finding a way to fit into the global digital financial mechanism, which is backed by the nature of decentralization.
With trends forming every day, there is a strong possibility that people will adapt to the idea of having BTC in their digital wallet as volatility reduces. Regulations are being drafted to make the investments understandable for citizens. Market maturation may take time as most of the knowledgeable information is yet to be shared with the general public.
Conclusion
The price volatility of Bitcoin is pretty complex at the moment. Aspects are emerging and settling every other day. Until the factors settle down, the industry will continue to be affected by a single factor, irrespective of the digital token one thinks about.
