Why Does Bitcoin Value Always Change ?

Bitcoin price level fluctuations in Bitcoin exchanges are driven by many factors. Volatility is measured in the traditional market by Index Index, also known as the CBOE Volatility Index (VIX). The volatility in Bitcoin does not have a generally accepted index because of criptocurrency as an asset class that is still in its nascent stage, but we know that Bitcoin is able to experience volatility in the form of a 10x price change versus the US dollar, relatively in a short period of time.

Here are some of the factors behind Bitcoin volatility:

1 . Adoption rates are hampered by bad press:
News events that scare off Bitcoin users include geopolitical events and statements by the government that Bitcoin is likely to be regulated. Early adopters of Bitcoin included several mall actors, producing headlines that gave investors fear. Bitcoin making news including the news bankruptcy Mt. Gox in early 2014, and the use of Bitcoin in drug deals through Silk Road ending with the FBI market closure in October 2013. Both incidents and public panic ensured the value of Bitcoin versus fiat currency fell rapidly. However, the investor who likes Bitcoin sees the incident as proof that the market is maturing, pushing the value of Bitcoins versus the dollar back in real time shortly after the minutes.

2 . Bitcoin's perceived value fluctuates:
One of the reasons why Bitcoin fluctuates against fiat currencies is the value of perceived assets versus fiat currencies. Bitcoin has properties that make it similar to gold. This is governed by design decisions by core technology developers to limit production to a fixed amount of 21 million BTC. Because it is very different from fiat currencies, managed by governments that want to maintain low inflation, high employment, and satisfactory growth through investment in capital resources, because the economy built with fiat currency shows signs of strength or weakness , Investors can allocate more or less of their assets to Bitcoin.

3 . Too many variants of perception in asset value and value of Bitcoin:
Bitcoin volatility is also driven largely by the various perceptions of the intrinsic value of cryptocurrensy as the value of storage and method of value transfer value. A storage value is a function whereby an asset can be useful in the future with some predictability. The value of storage can be saved and exchanged with goods or services in the future. The method of value transfer is an object or concept used to transmit property in the form of an asset from one party to another. Bitcoin's current instability makes it an unclear added value, but promises almost no frictional value transfers. Because both perceptions of the current Bitcoin spot price vary by dollar and other fiat currencies, we see that the value of Bitcoin can be swung by news as we observe with fiat currencies.

4 . Small option value for major currency holders:
Bitcoin volatility is also driven by holders of large proportions of total currency weakness in circulation. For Bitcoin investors with current holdings above about $ 10 million, it is unclear how they will liquidate a large position into an unstable position without touching the market. Because the volume of Bitcoin resembles a small cap inventory, the currency has not yet reached the level of mass market adoption that will be required to provide value options for major currency holders.

5 . The Bitcoin community exposes Bitcoin's security
vulnerabilities in an effort to get Bitcoin's security system repaired, but it makes Bitcoin even more unstable. This paradoxical security approach produces great results, with many valuable open source software initiatives for credit, including Linux. Bitcoin developers should disclose security issues to the public to produce the best solution. OpenSSL vulnerability recently attacked by a bug created by Heart Heart and reported by Neel Mehta of Google's security team on April 1, 2014, appears to have some effect on the value of Bitcoin in the next month, with a decline of approximately 10% for April Versus US Dollar. The development of open source Bitcoin software is built on the same basic premise that a free source code copy for the user to be checked and modified at will. This concept makes it the community's responsibility to voice concerns about software design, and when people do so, it reflects the level of confidence in the overall protocol design. It is only natural that the value will fluctuate with news events about security breaches.

6 . Bitcoin and foreign direct investment in countries with high inflation.
The case of using Bitcoin as a currency for developing countries currently experiencing high inflation is invaluable when considering Bitcoin volatility in these countries versus Bitcoin volatility in USDBitcoin is much more volatile versus USD than if Argentina's peso versus USD. In other words, almost unimpeded Bitcoin transfers make it a potentially attractive lending tool for Argentinians, as the high inflation rate for peso volatility loans is at risk in Bitcoin-funded loans outside of Argentina. Similarly, funders outside Argentina may earn higher rates of return in this scheme than they can use debt instruments in their domestic currency, potentially offsetting some of the risk of exposure to the high-inflation Argentina market.

7 . Mt Gox: Bitcoin's loss at Mt Gox is another volatility drive.
It should be noted that this loss and subsequent news about such losses have a double effect on volatility. They reduce the overall Bitcoin float by about 5%, yielding potential for the remaining Bitcoin value due to increased scarcity. The other Gateway Bitcoin saw a major failure at Mt Gox as the long-term Bitcoin prospect behind currency volatility.

8 . Bitcoin tax also affects volatility.
The latest announcement by the IRS stating that the currency is actually an asset for tax purposes has a mixed effect on volatility. On the plus side, any statement that recognizes the currency has a positive effect on currency market valuations. Conversely, on the downside, the IRS's decision to call it a property has two negative effects. The first is the additional complexity for users who want to pay with it. Under the new tax law, the user must record the market value of the currency at the time of each transaction, no matter how small. This is understandable because it seems too many questions about its feasibility for many users. Second, the decision to call it a currency in the form of property for tax purposes may be a signal to some market participants that the IRS is preparing to impose stronger regulation in the future. A very strong currency rule can cause the rate of currency adoption to slow to the point where it can not achieve massive adoption that is essential to its overall utility in society. The final step by the IRS is unclear about their motive of signaling and therefore has a mixed signal to the Bitcoin market.

Writing By: @imamaii