Any investor who is willing to make a cryptocurrency investment would want bitcoin to be a part of their investment portfolio. Despite the growing inclination towards cryptocurrencies, volatility remains one of the deterring factors. Price volatility is significantly impacting the interest of investors. But the most common question never fails to show up in the picture where there always remains a doubt in every financial investor about the frequent price fluctuation in Bitcoins. For more detail: hextechsecurity.com
This also increases the risk of investment but the same is in the case of the stock market as well. So why are people apprehensive about bitcoin investment? Let’s on to the probable reason that impacts the value of cryptocurrencies dynamically.
Potential Factors Driving Bitcoin’s Volatility- Points To Note
1) Media coverage: Whether it is a social media platform or news channels you can find special sections and segments discussing investment in cryptocurrencies. Moreover, several start-ups are claiming to provide the right assistance to invest in cryptocurrency and diversify your investment portfolio. No matter what, media plays an important role on the price fluctuation of cryptocurrencies.
News that spreads positive information about the cryptocurrency will increase its price while negative news will negatively impact its valuation. The same was seen in the case of bitcoin when Elon musk had shown interest in cryptocurrencies. Elon musk’s attention towards bitcoin had risen its value similarly, when he mentioned that dodge coin is more scalable and efficient than bitcoin, the value of this cryptocurrency had risen overnight.
2) Regulatory changes– Many nations are now bringing in regulatory changes in cryptocurrencies. For example, Canada, Australia and USA have introduced a taxing system and have mentioned bitcoin and cryptocurrencies as commodities. This makes a taxable and hence an individual who is transacting in cryptocurrencies has to pay a certain amount of tax. While this will certainly regularize the crypto market but at the same time, it also creates a way to diminish its value. When it comes to Bitcoin market price fluctuation, regulatory mechanisms with stringent rules, no doubt, play an important role.
3) Economic events-The economic events taking place on a global platform can impact the value of cryptocurrencies. The recent war between Russia and Ukraine harmed the value of bitcoin. Similarly, any global phenomenon like China banning bitcoin had led to a steep drop in the value of bitcoin. Hence these social economic events have the potential to impact the volatility of the crypto market.
4) Technical factors-Technical factors can also impact the value of the cryptocurrency. For example release of new software or your upgradation of software can have an impact on the price of bitcoin.
How do you proceed ahead?
Now that you know about the factors that have the potential to impact the volatility of the crypto market your next move should be to follow the right tips that will help you make the right investment decision. There are certain important aspects that you should consider when investing in Bitcoins.
- Start joining crypto communities– if you wish to make it through crypto investment, you must join crypto communities. These communities will help you understand and get a glimpse of how the crypto market operates in the real world. With this, it will be easier for you to invest. Moreover, you will also get first-hand information on trading and how will you be making an investment decision in the future.
- Research yourself– while you can certainly rely on the information given by the users or investors of cryptocurrency but the research that you do yourself will be more beneficial. Hence you must focus on doing the basic research yourself that will help you gain confidence about the crypto market.
- Invest in futuristic cryptocurrencies– When it comes to investing in cryptocurrencies, you are decision must be futuristic. Don’t look for short-term investment gains rather focus on long-term results that will give you more viable and profitable results.
Conclusion
In conclusion, we can state that crypto investments are definitely lucrative but only if one has the confidence and knowledge on how to invest. If you are getting started with Bitcoin investment, one fine platform to get started with is https://ethereumcode.app.