Klever
  • Home
  • Global
  • Exchange
  • Wallet
  • Education
  • NFTs
  • Announcements
  • Opinions
  • Marketcap
No Result
View All Result
  • Login
  • Register
Klever News
  • Home
  • Global
  • Exchange
  • Wallet
  • Education
  • NFTs
  • Announcements
  • Opinions
  • Marketcap
No Result
View All Result
Klever News
Home Global
crypto volatility

Why are cryptocurrencies so volatile?

by Jagdish Kumar
March 29, 2022
in Global
Reading Time: 5 mins read
2.9k
A A
0
Share on FacebookShare on Twitter

Cryptocurrencies are taking the world by storm. However, this has also created lots of fury among new users that have invested billions or a good sum of their investment in the crypto market and still don’t know how they work. 

Though the crypto sector has been present since 2009, the major developments started to take place in 2018, when Bitcoin, the world’s first cryptocurrency, nearly touched $20,000. 

You might also like

K5: a bright future ahead with the community being the biggest inspiration 

K5: a bright future ahead with the community being the biggest inspiration 

February 3, 2023
7.3k
Klever is your go-to DeFi solution 

Klever is your go-to DeFi solution 

February 1, 2023
7.3k

Since then, Bitcoin has moved up and down and crossed $69,000 in 2021.

During this period new crypto projects have also increased over many folds, which is now over 18,406 crypto projects to be specific, according to CoinMarketCap.com.

There are many factors that are also responsible for the volatility of cryptocurrencies that including speculations, scarcity, digital in nature, emerging market, media, whales, and no regulatory mechanism.

Let’s take a look at those reasons why crypto can be so volatile. 

1 – Speculations

One of the biggest drives of the volatility of cryptocurrencies is speculation – there is a lot of it daily on various social media platforms. 

Some experts speculate about crypto projects and crypto influencers also participate in this movement getting paid to promote the brands that might be good for users. 

Many times, it also happens that various channels promote a project alleging its potential, inducing users overnight. When they start buying it, the team vanishes, and users’ money is gone.

That’s why users need to be very careful and should always cross the information they are getting from various sources so that they don’t end up losing their hard-earned money.

Due to speculation, the prices of coins can come down to zero and vice versa. 

Crypto traders often want to get this speculation right and do keep an eye on the developments happening in crypto markets on a real-time basis.

2 – Paid media

Media also plays a very important role in the volatility of cryptocurrencies. 

Many media channels under the garb of awareness programs promote information on crypto, making false promises to users.

In India, this was a fact and film actors and actresses were roped in and paid millions to say that crypto can make you rich very fast and all sorts of false promises. 

As a consequence, the government demanded all crypto exchanges stop and take down all unsolicited advertisements from news and entertainment channels.

Media also started running daily crypto trading price information that attracted new users and investors to the promoted coins, but, soon all these coins vanished, duping victims, as the price of those coins was biting the dust. 

3 – Scarcity

Scarcity is a major question, as cryptocurrencies come with a limited supply. 

Many cryptocurrencies also have a burn mechanism that destroys coin supply, thereby raising its value. 

So once the coin is launched and its whitepaper provides attractive information to users, they will start buying it. 

This is done to hold as many coins users can hold at the rates, as the rates can spike after a few days.

4 – Digital in nature

As cryptocurrencies are digital in nature, it is not backed by any assets like fiat currency or commodities. 

So the price is set by the law of demand and supply, and with fewer coins with good use cases, there will be more demand for such coins. 

The prices of cryptocurrencies also depend on the holders they have. The more holders, the more trading happens, thereby increasing or decreasing the valve of the coin.

5 – Whales (Big investors)

Whales also referred to as big investors, are the biggest manipulators of cryptocurrency prices who can pump money on a coin and take it to the moon, or sell huge quantities and pull down the coin price within minutes.

As there are no trading barriers, whales can manipulate prices and get away with profits every time, whether the price rises or falls. 

They also cause volatility in prices, as retail investors which follow whales can end up playing in their hands. 

So many crypto projects have even barred whales from buying beyond a certain percentage in the project to check price volatility. 

6 – Lack of regulatory mechanism 

Unlike other asset classes, crypto is not governed by any sort of governing or controlling agencies. 

They are not controlled by any entity, like fiat currency or equity or bonds are controlled and managed. 

In India, as of now, there is no regulatory framework under which cryptocurrencies come, but globally, some countries have tried to bring crypto under regulators mechanism, like Dubai, Singapore, others. 

The only reason investors are getting attracted to crypto is that the user can always remain anonymous, which is a real cause of concern for governments globally.  

The emerging technology of crypto 

Cryptocurrencies are still at a nascent stage and developments are still happening, making them one of the emerging technologies. 

However, many nations are not very keen on adopting crypto, as there is no standardization of crypto technology that is acceptable to all nations.

It is barely over a decade since the idea of peer-to-peer cryptocurrency is among us, but it will take over a decade more for the markets to mature. 

Before the markets become mature, volatility will be a part of the crypto market.

All these factors are responsible for volatility in the prices of cryptocurrencies. Unless users are completely aware of this, they will keep booking losses, but there is hope: if users do proper research on crypto projects, they can mitigate the risk of price volatility.

Tags: bitcoincryptocrypto volatility
Previous Post

Can someone steal my crypto?

Next Post

Token Classes: Security tokens explained

Jagdish Kumar

Jagdish Kumar

Reporting & writing on crypto & blockchain for the past few years. A content eagle, journalist & writer with a passion to explore new technologies that can change human lives. Joined Klever to make Crypto simple. Follow me on Twitter @TokenBharat or email me at jagdish@klever.io

Related Stories

K5: a bright future ahead with the community being the biggest inspiration 

K5: a bright future ahead with the community being the biggest inspiration 

by Maluh Bastos
February 3, 2023
0
7.3k

Klever K5 Wallet’s launch has been the buzz in the last few days. The new and improved Klever Wallet app...

Klever is your go-to DeFi solution 

Klever is your go-to DeFi solution 

by Maluh Bastos
February 1, 2023
0
7.3k

The DeFi world is growing fast. Therefore, having a trustable and effective platform to navigate this universe can help users...

Time to start using K5: learn how to migrate to the new Klever wallet app version

Time to start using K5: learn how to migrate to the new Klever wallet app version

by Maluh Bastos
January 31, 2023
0
7.3k

KleverChain’s launch in 2022 was one of the biggest accomplishments for the Klever Ecosystem.  Klever’s very own blockchain is bringing...

Use cryptocurrency and blockchain for transparent and secure voting

Use cryptocurrency and blockchain for transparent and secure voting

by Warren Manuel
January 30, 2023
0
7.3k

The integrity of democratic voting systems is crucial for the functioning of a healthy democracy. In recent years, there has...

Next Post
Security tokens explained

Token Classes: Security tokens explained

Does crypto qualify as currencies or assets?

Download Klever Wallet Download Klever Wallet Download Klever Wallet
ADVERTISEMENT

Recommended

Ethereum

Coin of the Week: Ethereum (ETH)

November 14, 2021
7.5k
Tron (TRX)

Coin of the Week: Tron (TRX)

May 19, 2022
7.5k

Popular Story

  • Stand a chance to win your share of 10,000 KLV

    Stand a chance to win your share of 10,000 KLV

    8335 shares
    Share 3334 Tweet 2084
  • Test drive Klever Wallet, K5 and Win 1000 KLV & 1 KFI

    7021 shares
    Share 2808 Tweet 1755
  • Bitcoin battles back from record losses to $21,000

    5914 shares
    Share 2366 Tweet 1479
  • Klever showcases its blockchain ecosystem on a Time Square billboard

    5358 shares
    Share 2143 Tweet 1340
  • K5 adds new blockchain and KleverSafe support in the latest Android version

    5070 shares
    Share 2028 Tweet 1268

Follow us on Twitter

Klever News

Join the Klever community
Growing together we are stronger.
Be sure to follow us on social media to stay up to date.

Categories

  • Announcements
  • Coin of the Week
  • Education
  • Exchange
  • Games
  • Global
  • Hardware Wallet
  • Market Updates
  • NFTs
  • Opinions
  • Sponsored
  • Wallet
Download Klever Wallet Download Klever Wallet Download Klever Wallet
ADVERTISEMENT

Recent News

K5: a bright future ahead with the community being the biggest inspiration 

K5: a bright future ahead with the community being the biggest inspiration 

February 3, 2023
Klever is your go-to DeFi solution 

Klever is your go-to DeFi solution 

February 1, 2023
  • Sponsored Content
  • Advertise
  • Contact Us
  • RSS Feed

© 2022 Klever News - Premium Crypto news & insights by Klever Finance.

  • Login
  • Sign Up
No Result
View All Result
  • Home
  • Global
  • Exchange
  • Wallet
  • Education
  • NFTs
  • Announcements
  • Opinions
  • Marketcap

Welcome Back!

Sign In with Google
OR

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Sign Up with Google
OR

Fill the forms below to register

*By registering into our website, you agree to the Terms & Conditions and Privacy Policy.
All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
-
00:00
00:00

Queue

Update Required Flash plugin
-
00:00
00:00
Go to mobile version