Bitcoin is experiencing its biggest pullback in the last 42 days. And as scary as it may seem and no matter how much fear or caused, some see this as a good sign. Let’s learn how volatility — that is, changes in the prices of Bitcoin can be profitable.
Twitter discussion on the topic of arguments in favor of volatility, which was started by a student at Stanford University Conner brown.
Volatility is good.?
1)It shakes out weak hands and makes sure Bitcoins go to the strongest of hodlers.
2) It’s free Bitcoin advertising. Volatility makes headlines.
3) It’s a direct function of out bitcoins’s unparalleled absolute scarcity. Supply is static so price is volatile.
— Conner Brown (@_ConnerBrown_) June 28, 2019
First, the volatility can help weed out the weak players, leaving only those at the helm who really believe in cryptocurrency. In the end, somebody has “to be sold at lower levels”.
If bad advertising is also advertising, the volatility can be regarded as a free marketing channel for Bitcoin. Fortunately, the mainstream media loves to boast how useless Bitcoin. They diligently do it every fall. But the point here is that it draws attention to another increase in prices.
Yes, now Bitcoin fell back below $ 12. But somehow no one remembers that just three months ago, it cost 4 thousand. Perhaps volatility is a direct result of scarce nature of Bitcoin. As the supply increases according to specific rules, the price is naturally volatile because of changes in demand on the world market.
In the end, some analysts argue that volatility is important, if we want Bitcoin has grown from zero to a global reserve asset. Obviously we would not think about such terms, if Bitcoin price still fluctuated somewhere below one dollar.
Global reserve asset can’t be that unstable
So. And luckily Conner Browne continues to address this problem.
He believes that money is an evolutionary process, and new money had never been born suddenly and immediately feel a stable and liquid. And although now it would be quite reasonable to estimate some things in bitcoins, brown suggests that this phase of decision will come a bit later. As soon as Bitcoin will grow and phase of store of value is finished, it will become very stable. In reality, brown himself claims that appreciate in bitcoin is now much more reasonable than in the dollar.
Since the dollar is a flexible monetary base, prices are systematically distorted, as for artificial growth can be a part of the new monetary liquidity.
Bitcoin is deprived of such a mechanism, so it “represents the most stable and predictable monetary framework that we have ever seen.”
It will take some patience to overcome the volatility of BTC… in the short term it will allow us to create an economy which will no longer be terrifying volatility [re: artificial bubbles — approx.the editor].
Thus, although during a bear market, we partly fueled by hopes for declining volatility, it is important to keep in mind that we owe the massive bursts during the next bullrun. Of course, the main disadvantage here are the periodic sharp price pullbacks and corrections.
What are your thoughts about the volatility of Bitcoin? It is good for the long term, cryptocurrency or all of the same harms? Tell us in our cryptodata of hontarov.
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