The volatility of Bitcoin continues to play a major role in the share price development, according to two experts.
In the 12 years since its inception, Bitcoin (BTC) is best known for the volatility of its price cycles. Although some voices believe that Bitcoin is nevertheless suitable as a store of value because the fluctuations remain constant, there are also critics of this thesis such as Horizen CEO Rob Viglione.
„The only constant of BitQT and the cryptomarkets is that they are fraught with a high degree of uncertainty,“ as Viglione accordingly says to Cointelegraph. And further: „We are experiencing in real time the birth of a new industry, a new monetary system and a new Peer-to-Peer economy. The creation of a new world just doesn’t happen very smoothly.
Bitcoin is decentralized, knows no national borders and is not subject to any government. Users can send the crypto currency quickly and anonymously. In addition, it is publicly available and has a limited amount in circulation. The programming code provides that the rate of increase of the amount in circulation of Bitcoin is literally „halved“ every four years until the maximum amount in circulation is reached. This is to ensure a targeted shortage.
On the basis of these halving, crypto analyst PlanB has designed the so-called Stock-To-Flow forecast model (S2F), which compares the existing amount in circulation (stock) with the rate of increase of the amount in circulation (flow) and derives the future price development from this. With this model it is possible to bring at least some sense and constancy into the fluctuations of the share price, but here too the human element is left out. Therefore, there will always be a residual uncertainty, as Viglione believes.
„Yes, the development of the available circulation of Bitcoin is fixed from the beginning, everyone can calculate with a high degree of certainty how large the supply is today and how large it will be tomorrow, but the demand side is nevertheless subject to wild fluctuations,“ the expert says. To this he adds: „Naturally the uncertainty will become less with increasing acceptance by the Mainstream, but it is also somehow exciting to be present in the birth of the crypto industry.
MyEtherWallet CEO and founder Kosala Hemachandra sees likewise little constancy in the course development of Bitcoin.
„We humans tend particularly in the Trading-world to see patterns, where none are, so the expert. This phenomenon called Apophenie would let conclude that the course movements of the market-leading crypto currencies are to be regarded nevertheless rather as arbitrary. However Hemachandra admits that the course development is subject to fundamental mechanisms:
„It is naturally nevertheless completely logical that the course rises, if the existing offer becomes less. This is simply because the demand is still the same“.
And other factors can also have an impact on Bitcoin, such as technological developments or popularity.
In the course of the recent surge, the popularity of the crypto currency has also gone up, which could be a positive side effect that is beneficial to the price development in the long term, even if volatility soon causes a return.