What makes bitcoin so unstable?

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Traders are always concerned about volatility "Bitcoin". It is important to know what makes the value of this particular digital currency is very unstable. Like many other things, the value of Bitcoin is also dependent on the rules of supply and demand. If the demand for "bitcoin" increase, the price will also increase. Conversely, a decline in demand for "bitcoin" will lead to a decrease in demand. In simple words, we can say that the price is determined by how much money trading market agrees to pay. If a large number of people want to buy a "bitcoin", the price will rise. If more people want to sell "bitcoin", the price will drop.

Please be aware that the value of "Bitcoin" can be unstable as compared to more established products and currencies. This fact can be attributed to its relatively small size of the market, which means that less money can significantly shift the price "Bitcoin". This inconsistency naturally decrease over time when the currency will develop and market size increases.

After teasing at the end of 2016, Bitcoin has reached a new record high in the first week of the year. It may be several factors that make "bitcoin" be unstable. Some of them are discussed here.

bad press factor

Members "Bitcoin" is basically afraid of various news events, including statements by government officials and geopolitical events that "bitcoin" can be adjusted. This means that the rate of adoption "Bitcoin" is due to the negative or bad press reports. Various bad news caused fear among investors and forbade them to invest in this digital currency. Examples of poor headers with & # 39 is a significant use of "Bitcoin" for processing transactions with drugs through the "Silk Road", which ended with the termination of the market by the FBI in October 2013. This story caused panic among people and caused "Bitcoin" "value drops significantly. On the other hand, the trade industry veterans see such negative incidents as evidence that the industry is "bitcoin" matures. Thus, "bitcoin" began to gain increasing importance as soon as the bad press the effect disappeared.

Fluctuations perceived value

Another important reason to value "Bitcoin" become changeable – it swings perceived value "Bitcoin". You may know that the digital currency has properties similar to gold. This design decision is solved manufacturers the core technology to restrict its production to the static amount – 21 million BTC.. Because of this factor, investors can allocate fewer or more assets in the "bitcoin".

Safety violations News

Various news agencies and digital media play an important role in the formation of a negative or positive social concepts. If you see that something is advertised mostly, you are likely to go at it without paying much attention to the negative aspects. C & # 39 came the news of the breach of security "Bitcoin" and it really made investors think twice before you invest your money earned in trade bitcoin. They are too sensitive to the choice of any particular investment "bitcoin" platform. & # 39; the Bitcoin & # 39; may become unstable if the community & # 39; the Bitcoin & # 39; identify sensitivity to security, trying to create a wonderful response to open source in the form of security patches. Such security problems give birth to several programs with open source software such as Linux. Thus, it is useful to developers "Bitcoin" subjected to security vulnerabilities for the general public to take reliable decisions.

Recent deficiencies "the OpenSSL", attacking error "heartbleed", and reported by Neil Mehta (a member of the Google Security Team) April 1, 2014, have a reduced impact on the cost of the "Bitcoin". According to some estimates, in the next month the cost of "Bitcoin" decreased to 10% compared with the US dollar.

A small value of the option for the owners of large "Bitcoin" proportions

Shortage "Bitcoin" also depends on the owners "Bitcoin", which have a large share of the digital currency. For investors "Bitcoin" (not more than $ 10 million), it is unclear how they will settle the position, which will turn into a failed position and not moving in the market. Thus, "Bitcoin" did not affect the basic interest procedures accepted by the market, it would be important to give the option value largest owner of "Bitcoin".

Effects Mt Gox

Recent high-profile damage on the "Mt Gox" – this is another big reason variability "Bitcoin". All of these losses and the final news of large losses have a double effect on the instability. You may not know that it has reduced the total Bitcoin flow of almost 5%. It also creates a potential enhancement of the residual value "bitcoin" because of the reasons for the increased deficit. However, the cancellation of this rise was the result of negative news the next series. In particular, many other gateways "Bitcoin" saw a great failure in Mt Gox as an optimistic thing for the long-term prospects "Bitcoin".

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