The Constant Rise And Fall Of The Crypto Market: Is It Too Volatile?

According to research, over half of the adults in America have invested in the cryptocurrency market. 2020 and 2021 were perhaps the peak investment years for the cryptocurrency market – in 2021, the market cap for the crypto market surpassed $3 trillion. Both amateur and professional investors rapidly succumbed to the lure of the mystery of the crypto market over the years since the 2016 crypto boom, when the market entered a new and utterly bullish market. But it’s no secret that the crypto market is volatile – numerous high-profile investors have lost their fortune due to the bad fortune of the sometimes unpredictable crypto market. Is it too volatile? Let’s explore.

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The lure is the promise of low investments that come to fruition over time – during that time, that investment will go through the highs and lows of the crypto market, making many people wonder if the investment is too volatile and to withdraw. Take the Smooth Love potion price as an example.

The current trading price is $0.00277295, which is on the lower end of its lifetime highest value, yet experts predict by the end of the second half of the year, it could nearly double to $0.004214. It’s one of the most anticipated coins of the year. But in the meantime, the sharp rises and falls in a 24-hour trading window can make people feel nervous. That’s where many amateur traders fall short – cryptocurrency is very much a long game. Take Bitcoin as the perfect example.

People who invested $100 in Bitcoin when it was worth 10 cents in October 2010 would have amassed a fortune of $48 million when Bitcoin was at its all-time highest, but many people sold in the early days and throughout due to volatility and uncertainty. For example, in 2017, the value of the coin dropped by over 45%. In 2018, it decreased by a further 12% amid rumors South Korea was potentially planning to ban cryptocurrency. That begs the question, what’s behind the crypto markets’ unprecedented volatility?

One of the biggest causes of market volatility is the media and rumors. Take the South Korea fuelled 12% decrease in the market value of Bitcoin – South Korea didn’t ban cryptocurrency investment, and the market value of Bitcoin recovered. The cryptocurrency market is highly sensitive to news and events, such as government regulations, security breaches, and major company announcements, which can impact investor sentiment and cause price swings.

One of the other primary reasons for the volatility of the cryptocurrency market is its decentralized nature. Unlike traditional financial markets, where central authorities regulate and stabilize the market, cryptocurrencies operate on a peer-to-peer network. That means that the value of cryptocurrencies is subject to fluctuations based on supply and demand, which can change rapidly and unpredictably. The highly speculative governing of the market with no established regime is more unpredictable than stocks and bonds.

Despite being a high-risk investment, as most investments are, it’s worth noting it’s a potentially high-return investment and one that’s relatively easy to understand. Tons of crypto trading predictors and advice websites predict the rise and fall of crypto coins and give real-time information. It also helps that the crypto market is digitized, with many apps and websites giving individuals instant access to a market that’s relatively easy to understand – ByBit is one example. It’s perhaps one of the reasons why it’s the main investment for the younger generation – 18-24-year-olds invest more money into cryptocurrency than any other investment.

It’s also interesting that countries are now accepting cryptocurrency as a legal tender, mainly Bitcoin. But there was once a time when world governments rejected the idea of this bewildering digital coin. However, countries like El Salvador and the Central African Republic are paving the way towards a new era of acceptance as they become the first countries to accept the currency as a legal tender. Even in countries where it’s not an official tender, there are still Bitcoin ATMs where individuals can make digital transactions.

The widespread and growing acceptance, coupled with more merchants accepting payments, has put cryptocurrency firmly on the map. Companies like Lush, Subway, AT&T, and Burger King accept cryptocurrency payments, and more add themselves to that list almost daily.

Cryptocurrency is an excellent investment – it makes for a diverse investment portfolio and has tons of potential. As with any investment, you shouldn’t put any money into it that you can’t afford to lose. Still, it’s one of the most fun and accessible investments; when you know what you’re doing. Prior research is essential. Many people are also exploring the world of NFTs, a futuristic concept that’s potentially the future.

The future of cryptocurrency is bright and tricky to ignore. It will always be a volatile market carrying an element of risk, but it’s one that will always be a high-return investment. The market is growing at an unprecedented rate, with experts predicting now is the best time to invest in the market.