If you ask expert investors like Robert Testagrossa, they will probably tell you that once they have invested in a certain crypto coin, they don’t even follow what the market does. The reason for this is that those who truly believe in crypto, understand that the very big gains are going to come in the future, perhaps as far down the line as 10 years. To the rest of us however, crypto can be a roller coaster and from one day to the next your investment could balloon and crash by a huge amount.
Many don’t have the stomach for this, and they will panic sell and buy as the price goes down and up, rather than sitting tight and looking to buy at the bottom of the market. The last 7 days have been a perfect example of this, where we have seen Bitcoin rise in price by 22% in just 7 days. This volatility scares some, but it is important to understand why things are so volatile.
Resistance From Traditional Banks
If you ask city bankers in countries like the US, UK and perhaps even China, they will tell you that there is nothing wrong with the current financial system around the world. Currency costs are pegged to the dollar and everything must dance to its tune. Unfortunately however this does no favors to poorer countries, who struggle as a result and who have big problems making the simplest of transactions. Crypto however, very much levels the playing field and ensures that there is no centralized bank which can set rates and manipulate the markets to keep everything in ‘order’. There is fear from those city bankers and they will push back against the idea of crypto.
The two major factors in how the price of crypto changes come down to fear and greed. When everyone is fearful, the price will drop and this is why the governments around the world are able to impact the price of Bitcoin and other coins so heavily. If it is widely considered that President Biden will make changes to the world of crypto, you may see a lot of people selling up. Equally if we get Elon Musk out there talking about crypto being the future of money, you are going to see prices rise as more people invest.
Whilst this is happening less and less, we cannot ignore the fact the whales in the market can still have a huge impact on the price of crypto. These are people who hold massive amounts of cryptocurrency and who can sway the price as they buy and sell, because of the large amounts which we are talking about. This used to happen more often but now the market cap is so big that we simply don’t see it on the scale that we once did, which is great for everyone who is holding.
A volatile market but one with great potential.