The value of Bitcoin increased from $1000 to $20,000 before dropping down to $13000 at the end of the year in 2017.From then on, there are huge fluctuations in the value of this cryptocurrency. But according to experts, bitcoin is the currency with the least amount of volatility. Other cryptocurrencies are still highly volatile. This volatility is one of the prime reasons why investors are backing off from investing in this cryptocurrency. This volatility scares new investors especially. If you understand the reason behind its volatility, you will be able to invest in Bitcoins in a better manner.
Bitcoin came into existence in 2009 but the currency gained mass popularity only in the year 2017 when its value increased considerably for the first time, enabling investors to take notice of it. Most of the Bitcoins in the world is owned and managed by a small group of people. This means that a single person can cause the value of Bitcoin to fluctuate by releasing a huge number of Bitcoins into the market, thus increasing its value. The price of Bitcoin also fluctuates on the basis of political events Also the value keeps changing when new countries and financial institutions start adapting this cryptocurrency.
Bitcoin is an entirely new concept and is based on Blockchain technology. It is also treated differently than other types of currencies in the market because the investors themselves are not about the uses of Bitcoin. All this leads to a whole lot of instabilities. Moreover, Bitcoin cannot be used as a type of spendable money. This is because every transaction of Bitcoin requires computing power and electricity. This has created a lot of uncertainity in the market which has led to rapid changes in its value. Also Bitcoin trading never stops, the markets are open round the clock, which increases the uncertainities in the trading of this cryptocurrency.
Also the price of Bitcoin is based on the concept of supply and demand. If the demand for free btc increases, its price will also increase. Similarly the decrease in demand for Bitcoin in the market will lead to a decreased demand for this cryptocurrency. In other words, the price of Bitcoin is determined by the amount that the trading market is ready to pay and also on several external factors. Also the currencies like Bitcoin are still unregulated by any Governments or organizations .Hence the currency increases or decreases in its value at regular intervals.