According to Bloomberg, cryptocurrencies have lost about one-third of their commercial value since their peak in early June. In fact, the value of Bitcoin grew by 203% between January 1 and June 11, fell by 36% between June 11 and July 16, and has recovered by 20% since then. As per the report published by Ethereum World News in early-October, the volatility of the Bitcoin reached the lowest.
However, volatility is a double-edged sword and the market of cryptocurrency has revealed that by 2018, the price of Bitcoin would lose over 50% from its final year rate of US$ 13,000. The market of cryptocurrency also experienced the negative effects because of the Bitcoin’s volatility and as its price declined; the volume of Bitcoin operations and even the curiosity in the field of digital currencies appears to have decreased.
Why volatility is important and what it means for the market?
Volatility plays an important and major role to help cryptocurrencies reach the conventional market. The Bitcoins and Cryptocurrencies were only put into the mainstream media as a tool of the dark web when its legendary silk road was closed. All of a sudden leaders, experts, banks, and financial institutions had their reviews and opinions about Bitcoin. Some of them were thinking that it was a fashion trend or even comparing it to rat poison and called it too unstable to be taken sincerely. However, discussions about Bitcoin started to take place among investment circles.
The threat is that the volatility of Bitcoin can cause a large evacuation of investors, which seriously harms the hopes that other cryptocurrencies will obtain a state of mass adoption. This is the major reason why volatility is vital to establish Bitcoin and any other cryptocurrencies as a probable asset that could also be accepted as a currency in general. On the other hand, this is the same volatility that could kill the goal of Bitcoin or any other Cryptocurrency. Itai Cohen, who is the CEO of Homeland, a mortgage crowdfunding platform, has stated to Cointelegraph that within its scope of ownership and mortgages, they see volatility as something that moves investors away from the cryptocurrency market and toward more stable investments such as the real estate market and their goal is to try to transcend cautious housing investors while serving a bolder new investor who accepts this volatility.
As far as managing the volatility of Bitcoin and other cryptocurrencies, it is nothing new for the institutionalized investors. Forex, bonds, stocks, and assets are prone to changes, but the main issue is that the volatility of Bitcoin and cryptocurrency is out of reach. In addition, investors in this field are often new, and they have not experienced the range that happened in the previous changes. This way, volatility should be the focus if there is a future in which cryptocurrencies are widely used in everyday instances. However, it takes a lot of courage and some tactical knowledge to navigate successfully through minimums, in order to keep oneself safe and sound and contribute positively to a growing crypto-economy.