Bitcoin and basic altcoins have shown great volatility lately. Some traders assured the first price surge ties up with the value of the offers available on the market and reasonable reality acceptance by the market participants, while others, at the same time, stated that growth has been fueled by the bears, willing to get profit from multiple digital currency turnover.
Recent cryptocurrencies price drop eggs on a number of questions concerning their price reliability ass a whole. Various questions are asked - starting from the origin of cryptocurrencies ending with the questions on stunning price fluctuations.
Matter of Course
John Cassidy, the president of Crypto Consultant says it's a normal thing and there's nothing unusual here:
"As we witness the birth of a new financial system taking shape, it is natural to witness a certain level of speculation. Organic growth is certainly taking place and progress is being made from the top down. Government recognition and approval, continued merchant and consumer adoption along with innovative services are helping broaden the currency's appeal and utility."
Cassidy explains the bears and other traders, which are present on the market for a long time will always be focused on the profit taking after a sudden price growth and as he states, it will always take place every time the price goes up. When the new money comes to the market and as the Bitcoin price grows, experienced and adapted traders will certainly be looking for profit.
He also denotes the similar dynamics is typical for every market, however, taking into account the cryptocurrency markets is a new thing - their volatility can be experienced stronger. As time goes by the Bitcoin volatility should decrease.
Network Effect
Dana Coe from Bitlox believes the network effect of accepting btc and other cryptocurrencies affects their price fluctuations greatly. Ms. Coe explains that many people "at least airily" heard about bitcoin, though as a matter of fact not many of them actually joined it.
There's also an idea that assures the fat there is a majority of altcoins which are not applied in real life, the growth in this sphere is like a sequence of joining the "majority" and it can't be considered as the index of wise investing and natural growth.
Many people got used to look for a new boom and it creates some "follow up", which leads to price rise, says Dana Coe. The speculation itself is not a bad thing at all, it's a free market where there is always place for winners and losers. The natural growth takes place due to the growth of the database of those using all cryptocurrencies and the thrilling market is actually the best advertising, which causes people to rise in amazement, make a decision and join the others.
