Volatility Level Increases in Cryptocurrency Markets; Is it a Good or Bad Sign?
Bitcoin’s price has had the history of making huge price swings amid its unregulated nature and the involvement of price manipulation activities. Indeed, the crypto market has made or wiped of billions of dollars in the few sessions alone.
For instance, after experiencing the period of the lowest level of volatility in the past two months, Bitcoin and the rest of the market has resumed their volatile swings over the past couple of days. BTC has lost 23% of its value, and its market cap dropped below $90 billion for the first time in the last 13 months.
Bitcoin’s price volatility also jumped to the highest level since June this year. According to bitvol chart, Bitcoin’s price volatility is standing at around 3.56%.
Excluding Ripple, the rest of the market is in the doldrums due to the unexpected bearish pattern. The traders are blaming the SEC for the steep selloff. The SEC has announced to crackdown crypto markets amid the substantial increase in illegal activities.
Is Volatility Good or Bad for Cryptocurrency Markets?
The price volatility is one of the biggest hurdles for wider adoption of crypto coins. From investor to retailers and large corporations, everyone is showing their concerns over the huge price movements of cryptocurrencies.
“Bitcoin’s problem is how it works as a payment, from both a reliability standpoint and from a cost standpoint,” says Xiahong Lin, founder of Bodhi, a China-based decentralized prediction market platform. “When you add price volatility to this, these factors make Bitcoin less attractive as a currency and more attractive as a store of value.”
The price volatility has never been considered as a positive factor for any asset that could also work as a medium of exchange. Therefore, the price stability is a good sign for the future fundamentals of cryptocurrency markets.
Some of the market pundits are praising stable coins (whose values are correlated to real assets) for showing less volatility compared to crypto coins.
An analyst from cryptocurrency loans service says, “Unfortunately, volatility works both ways, so the corrections are heavy as well. I think that is the foundation for the rise Stablecoins – the search for price stability. They also come with the ease of transferability and cost-efficiency, which we all like with regards to crypto assets.”
Do you believe low price volatility would increase Bitcoin adoption? Express your opinion in the comment section below.