Crypto currencies volatile
Why are crypto currencies volatile? Last year was the least volatile year in stock market history, and has been for decades. Traders who have benefited from price fluctuations in the past have given up their jobs on high-frequency trading algorithms performed by computers working in the millisecond range. On Wall Street, people are being replaced by machines, and four years of volatility in the stock market could be summed up by just a month of fluctuations in the crypto currency markets. Crypto veterans know this is a fact, but why is this asset class more volatile than any other liquid asset in the market?
#1 No intrinsic value for the Bitcoin trader
Despite numerous company valuations and a review for the Bitcoin trader, crypto currencies do not sell products, earn revenues or employ thousands of people. They usually do not pay dividends, and only a small part of the total value of the currency goes into development. That is why they are difficult to value. How do we know whether they are overbought or oversold? What is ‘the’ perfect value or is Bitcoin again overpriced? Without the fundamental data on which this information is based, we can only rely on the market sentiment that is often dictated by the media. And they make money as the number of viewers increases.
#2 Lack of regulatory oversight as seen on https://www.onlinebetrug.net/en/
Another reason why crypto currencies are volatile is that crypto currencies are a global phenomenon, and while governments are rigorously cracking down on industry, regulation of crypto currencies is still in its infancy. Such limited regulation allows market manipulation, which in turn leads to volatility and prevents institutional investment, as any large fund cannot guarantee that its capital is truly secure or at least protected from such actors. In other words, one could say that crypto currencies are volatile because they are volatile. Yes, we understand: that sounds funny :-).
#3 Lack of institutional capital
While it is undeniable that some fairly large venture capital firms, hedge funds and high net worth individuals have invested in crypto currencies, much of the institutional capital is still offside. At this stage, there is limited momentum and support for a crypto ETF or investment fund in this regard. Most banks admit that this would undoubtedly be possible, but that there is not yet enough capital or acceptance publicly available.