Something to remember with the crazy Bitcoin price swings

in bitcoin •  last year

Bitcoin, and cryptocurrency in general, has seen some pretty crazy price swings since inception. Unfortunately this along with the general lack of understanding of many holders, has led to a lot of market manipulation, and a few manipulating the price for the many.

The biggest thing to keep in mind with this, is that cryptocurrency is not a market that we have had time to find a real price point for. We know the worth of a gallon of milk, both based on what it costs to produce, and on what people are willing to pay for it. We don't have this luxury with a crypto asset such as Bitcoin (a case could maybe be made for USDT, but even with that the value relies on the reliability of the parent company).

This means crazy price swings are inevitable. If we can see price swings on goods that we can calculate a literal value for, a speculative asset will have those same issues but with much more volatility.

Whether you are looking at Bitcoin as a long term investment,day trading, or a liquid asset that you get paid in and spend, you need to keep in mind that it is an asset that we are still finding a value for. The easiest answer is, potentially a heck of a lot. It obviously has the potential to compete with the credit card processing industries, cash service, even replacing currency for countries. And with all of that, it is just scratching the surface (smart contracts, record keeping, rights and ownership, time logging, etc).

The conclusion is, until we have a realistic calculated value for the worth of cryptocurrency as a whole, the swings not only are likely to happen, they WILL happen. This obviously makes it hard for an investor to plan for the value from day to day, and it seems like for the time being the daily movements will be more based on investor sentiment, public availability, and news, rather than any ties to underlying value.

Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!