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Sophia

Should Bitcoin's drop in price be a big concern?

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 Hi there,

The Bitcoin price has been dropping in the last couple of days. Is the price drop anything to worry about?

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Hello Sophia,

For any professional cryptocurrency trader, volatility represents the heart of the market. This is because it is a measurement of oscillation in daily average prices, and it gives a precise insight into current market conditions.

The anticipation of the recent bitcoin halving event had increased volatility because of the significant uncertainties it represented. Depending on individual trader analysis, prices would either dump or rally, during, and after halving. This led to a short-term spike.

Once halving was over, the metric went back to previously prevailing levels.

Crypto markets seem to mirror the actions of traditional markets. Therefore, fear dominates greed since, even with widespread Central Bank stimulus packages, investors tend to worry that world economies would grind to a halt due to the pandemic. A proficient trader needs to note bitcoin is a real pointer to market status. 

Bitcoin creates a hedge to this Central Bank interference. Bitcoin does not have circuit breakers or limit downs since it is actually a real market without a real clearing price. Bonds and stocks do not represent real markets because their prices feature manipulation and political interference.

 

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