The price of cryptocurrency is so volatile due to speculation that you can look at the charts and notice significant fluctuations in a short time. While today we can buy physical goods and services using cryptocurrencies, most people use them as an investment. We see people buying and selling it as if no other assets exist. This buying and selling cycle makes virtual currencies so volatile, especially when done with high frequency.
It may be challenging to accurately assess the influence that volatility has on the uptake of digital currencies due to the nature of the phenomenon. However, it is not impossible to benefit from the instability because there are now automatic trading robots that effectively serve as a cushion for traders. An excellent example of such a robot capable of delivering you good trades in the face of volatility is BitIQ. Using this auto-trading robot, you can help yourself increase your earnings and ROI. If you think this is for you, here is a must read review about it on BitConnect. This robot has many testimonials about its performance in the market, which you can read along with the following two root causes of cryptocurrency fluctuations.
Causes of cryptocurrency fluctuation
Panics and bubbles in cryptocurrencies
The first problem we must face is public perception. This public image is a significant problem of greatest concern regarding financial decisions that have a very risky basis. It is undoubtedly the biggest reason for instability in digital currencies. It affects value when many investors take action based on unfavorable information or skepticism regarding their assets. Regardless of whether the measure by which this new information is judged has trustworthy grounds or not. A poor or rapidly changing perception can quickly lower or destabilize cryptocurrency prices. And this, in turn, leads to a vicious downward spiral, a panic sale. Therefore, the perception and management of information is a critical component of supporting new projects, even if the risk is real or ambiguous.
The impact of bad press or news
The press has always been a determining factor when making investment decisions. Whether there is a real threat or an apparent one, people exaggerate everything without adequately analyzing the situation. This is part of human nature. Today, many traders tend to overvalue what they read without even giving it a chance to be studied and project the different possible scenarios. This causes both positive and negative information to drive many to buy and sell and thus create enormous volatility in the market.
Investors who consider themselves riskier are eager to put their feet in a market that has just received some fresh news. They try to profit from broad price movements. Still, the reality is that a person can rarely satisfactorily make investments of this type because it is nothing more than mere speculation.
CONCLUSION
Volatility is something that we live within any market, in some more, as in the case where new and unknown technologies are presented, and in others more minor, such as traditional ones. But it will always be a factor. Here the important thing is to be an investor and not a speculator, where we make decisions based on all the information and not on market sentiment.
Cryptocurrencies will continue to rise and fall until it is a much more mature market, which could take years. But if we are convinced of our investment thesis, what made us buy in the first place, and we do it with a long-term perspective, the volatility against us will end up being just a small anecdote. As long as the option in our favor is the confirmation, we have done our job well.
