The Recent Bitcoin Raging Volatility: The Good And The Bad

Bitcoin has been known to be volatile. Historically, the cryptocurrency has gone through massive spikes in both directions. As such, there’s always been a constant debate on whether or not such volatility is a positive trait or a massive disadvantage. As always, the case can be made in favor of both sides. 

Bitcoin’s Volatility Can Be a Good Thing

Looking at the 7-day chart alone shows us that Bitcoin is, indeed, volatile. 

BTC/USD. Source: CoinGecko

The cryptocurrency surged up to almost $14,000 before dropping down to around $10,800. And all of this happened within the short span of a few days. 

However, according to popular Bitcoin proponent Conner Brown, the cryptocurrency’s volatility implies a lot of benefits.

According to him, that’s what shakes out the weak participants in the market and guarantees that Bitcoin goes “to the strongest of hodlers.” He also makes the case that it puts Bitcoin at the forefront as the more volatile it is, the more media headlines it takes. 

From a more fundamental perspective, Bitcoin’s volatility is a direct function of its absolute scarcity. Brown argues that because the supply is static, the price is volatile. 

At the same time, the proponent outlines that volatility is needed for something to go “from nothing to a global reserve asset.” He says that it’s a part of Bitcoin’s evolutionary process and that “new money” is not born suddenly as a perfectly stable and liquid “store of value overnight.”

Brown is not the only one in favor of Bitcoin’s raging volatility. Arthur Hayes, CEO at popular bitcoin margin trading exchange BitMex, has also spoken of it as a benefactor. 

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 the Bad Side of It

The high volatility of Bitcoin also has its pitfalls. It’s commonly associated with price and market manipulation. This is exactly one of the reasons for which the US Securities and Exchange Commission (SEC) has yet to approve a Bitcoin ETF

Last year, the Commission denied the application of Cameron and Tyler Winklevoss on the grounds that Bitcoin is subjected to a serious amount of fraud, as well as of manipulation. 

Hence, it’s probably safe to assume that the SEC sees this raging volatility as one of the roadblocks for the approval of an ETF. 

Also, its high volatility makes trading a lot riskier. While some see it as an opportunity, others are definitely challenged by the major swings coming more often than not. 

In any case, it’s clear that Bitcoin’s volatility comes with its fair share of pros and cons. It’s important to keep it in mind when you trade or invest in the asset in order to prevent major losses. 


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