What are some reasons for Crypto Price Volatility?

dharmendar

Cryptocurrencies are too much volatile. Just a few days ago, bitcoin lost more than 10% in a couple of days. What causes so high volatility in crypto?

raman

The reason for such high volatility is that crypto markets are generally controlled by retail owners who have a low-risk appetite. Whenever there is a small decrease in prices these retail holders quickly sell their funds which causes a larger fall.

chetan

The lack of market regulation stops smart money from flowing into crypto. Smart money are large investors who have a strategy to hold for long term and not sell at every price correction. This is seen in stock markets where institutional investors stay invested for long durations and keep the prices stable.

harsh

As crypto markets mature, people realize that keeping funds for a longer time causes more gains. But newcomers and fence-sitters are always in panic and they cause a panic sale like what happened in USDT in May 2022. As markets mature, the number of these panic buyers and sellers decreases because they switch to passive investment like ETFs.