Bitcoin markets have definitely been known to be volatile. In the past, the cryptocurrency has experienced notable moves in both directions. Hence, there’s been a continuous debate concerning whether or not this volatility is a positive trait or a significant disadvantage. As with most good arguments, a case may be made in favor of either side.
Bitcoin’s Volatility Can Be a Good Thing
The 7-day chart alone shows us that without a doubt, Bitcoin is, indeed, volatile!
The cryptocurrency king rose to almost $14,000 shortly before backing down to about $10,800. And pretty much all of this happened in just a few short days.
That being said, according to leading Bitcoin proponent Conner Brown, the cryptocurrency’s volatility has more than its fair share of benefits.
Volatility is good.👇
1)It shakes out weak hands and makes sure Bitcoins go to the strongest of hodlers.
2) It’s free Bitcoin advertising. Volatility makes headlines.
3) It’s a direct function of Bitcoin’s unparalleled absolute scarcity. Supply is static so price is volatile.
— Conner Brown (@_ConnerBrown_) June 28, 2019
According to him, volatility is what shakes out weak market people and ensures that Bitcoin goes “to the strongest of hodlers.” He at the same time makes the case that it sets Bitcoin in the spotlight, as the more volatile it is, the more news headlines it generates..
From a more fundamental perspective, Bitcoin’s volatility is a direct feature of its outright scarcity. Brown contends that due to the fact that its supply is static, the price is volatile..
Together, he stresses that volatility is required in order for something to go “from nothing to a global reserve asset.” He says that it’s a normal part of Bitcoin’s evolutionary process and that “new money” is not born all of a sudden as a perfectly stable and liquid “store of value overnight.”.
Brown is not the only expert in favor of Bitcoin’s storming volatility. Arthur Hayes, CEO of the well-known Bitcoin margin trading exchange BitMEX, has also spoken of it as a benefit.
You want as much volatility as possible to have as much chance that Bitcoin goes to $50,000, $100,000, $1,000,000, whatever that high number is.
But There’s Also a Bad Side
Bitcoin’s high volatility likewise has its pitfalls. It’s frequently associated with price and market manipulation. This is one of the reasons why the US Securities and Exchange Commission (SEC) has yet to authorize a Bitcoin ETF..
Last year, the Commission rejected the application of Cameron and Tyler Winklevoss on the grounds that Bitcoin is subject to a serious amount of fraud along with manipulation..
Thus, it’s probably safe to assume that the SEC identifies this roaring volatility as being one of the roadblocks for approving an ETF..
Moreover, Bitcoin’s high volatility makes trading a lot riskier. Even though some see this as an opportunity, others are definitely challenged by the persistent and major swings.
Regardless, it’s clear that Bitcoin’s volatility comes along with its fair share of pros and cons. It’s important to keep that in mind when you trade or invest in the asset in order to prevent major losses.
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