When Will Crypto VOLATILITY End?

The year 2017 was the most action-packed year in the history of cryptocurrency. Traders sat glued to their screens for most of their waking hours while the bigger investors sought the help of software programs to take action at the right time, down to the second. Even those who have decades of experience trading in stocks were surprised at the huge price movements in the crypto markets.

I have listed below some of reasons that may be the probable causes for this high degree volatility of cryptocurrencies.

Age

Although crypto investors come from all walks of life from all age groups there is no denying the fact that crypto attracts the young. Those who are a little more tech savvy and understand the nuances of blockchain technology, are more likely to invest and trade in coins. The average investor being young. he is the first to bail out when prices start falling or on the other hand, invest quickly when prices rise. Senior investors tend to spend more time watching the trends before making a move.

Regulations

While the stock market is well regulated the crypto markets have few governmental regulations although governments in many countries seem to be reacting negatively to crypto - which doesn't help when it comes to the inevitable. In due course if time hopefully we shall see logical rules and regulations that encourage the growth of the fast growing crypto industry, rather than hamper it.

But this adds to the volatility with most people not clearly able to figure out whether their country's government is for or against crypto trading and investment.

Liquidity

The world has been used to stocks and shares which usually convert to fiat currency when liquidated. While coins can also be converted into fiat currency investors prefer to hold it in Bitcoin or a crypto of their choice.

Storage

Unlike fiat capital, crypto is stored away in wallets online and offline and not in banks which is one of the main features that distinguishes the new currency. But this also means that banking and financial regulations that stabilize fiat currency movements do not apply to crypto.

Movement

Seniors have been known to keep their money saved away for years to use in their retirement years. This component of wealth is devoid of any movement and hence causes less volatility. Not so with crypto that is always being traded and moved if only from one coin to the other.

Financial Backing

Cryptocurrency is not backed by large financial institutions which give stability to fiat currency exchanges. Although there have been some positive statements issued by financial experts the big funding of crypto is yet to happen by large financial investors.

Exchange Value

Last but not the least cryptocurrencies do not have a direct exchange value for most goods and services.

But no one can predict what the future holds in terms if regulations for crypto. There will be a time soon when cryptocurrencies shall acquire more direct purchasing power and additional regulations in favor of coins are introduced. That will be the time when volatility in the crypto world will give rise to stability for the long term.

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