In the series “The biggest myths about crypto currencies” we would like to take a closer look at the 10 most common claims concerning crypto currencies and their chances and risks. We will daily a new myth vorknöpfen and check this for correctness.
The volatility of crypto currencies makes Bitcoin loophole investments unattractive
One of the arguments frequently put forward against investing in Bitcoin loophole crypto currencies is: “There are such high price fluctuations and nobody knows what it will look like tomorrow, in a week or in a month. Let’s leave it at that.” But are the price developments on the Bitcoin loophole crypto market really a reason to decide against crypto investments? Let’s take a closer look at the situation.
In fact, the high volatility in the markets cannot be dismissed at the moment. The total market capitalisation of all crypto currencies has increased fifteenfold since the beginning of this year alone – this corresponds to an increase of 1400 %. If you pull out the Bitcoin as a crypto pioneer, you still have a value increase of more than 6,000 euros, when it rose from a market value of about 800 euros in January of this year to a temporary all-time high of 7,000 euros.
However, these absolute figures do not speak for themselves. So one cannot imagine the price rise of Bitcoin and other crypto currencies as a linear straight line, which begins at a certain starting point and then continuously points upwards. Rather, volatility means a constant up and down, including phases of stagnation. Critics might say that it is precisely these uncertainties that make crypto investments more difficult, since one can never know which point in time is best for getting started or when one should possibly wait for a price correction.
High volatility can also bring advantages for investors
Day traders in particular, who are willing to buy and sell their coins at any time, can make quick profits through high fluctuations. In addition, larger swings are almost always associated with external events such as regulatory measures or an imminent technical innovation. Those who are always informed and in the picture therefore have a clear advantage and can better classify volatility.
In addition, it is not written in stone that this high volatility will continue in the future. Despite the radical increase, the crypto market is still comparatively low capitalized and very susceptible to sudden changes in direction. There is reason to believe that volatility will return to normal with higher market capitalisation and possibly return to 2015 and 2016 ratios – in those years Bitcoin had lower volatility than oil and gas.
In summary, while the problem of volatility is real, it may not necessarily be a problem on closer inspection. Fluctuations can also benefit the investor, and they will become smaller as crypto currencies continue to exist. And despite all the fluctuations, Bitcoin and Co. have always set out for a new high after each trough. The long-term development thus points upwards, which could also give long-term or risk-averse investors security.