Bitcoin

All You Need to Know About Bitcoin Price Volatility

Jan 31, 2024, 6:45PM
5 min, 43 sec READ
Brought to you by mcx.ae

Bitcoin has become one of the hottest topics of the digital era. This digital currency, or you can even call it digital gold, has a huge demand.

People have earned millions and billions from cryptocurrency. However, on the other side, people have also lost their millions and billions because Bitcoin is a risky investment. 

Undoubtedly, bitcoin is a promising investment asset but volatility is making it challenging.  The high and low fluctuation is quite common in the bitcoin volatility market. So basically, one should invest smartly.

Fortunately, many people are willing to take risks and want to invest in bitcoins but on the safer side, it is necessary to know about bitcoin price volatility. The price swings get high and low unpredictably. 

Nowadays, you can easily buy bitcoin for cash or buy bitcoin in Dubai but to avoid loss it is necessary to take smart steps. Like if you are a beginner, you should seek professional help and choose well-known exchanges for buying and selling of bitcoins. You can also use secure wallets and most importantly be aware of scammers and hackers to protect your digital currency. 

Factors Behind Fluctuations

Bitcoin volatility is not based on a single factor but there are several different factors. Investors are tracking these fluctuations so that they can make profitable decisions. Some of the factors are 

Demand and Supply

The more people demand, the more the price will increase. The scarcity of bitcoin, limited supply, mining difficulty, and market demand affect the price of bitcoin. 

Sentiments Of Investors

You know, we are living in a digital world where social media plays an important role in our lives. The discussions regarding the rapid high or low price of bitcoins affect the sentiments of investors. The investors hurry in making decisions. 

Like if the market is moving towards high volatility then investors jump in and invest their high amounts. This thing pushes the prices up. On the other hand, when investors hear any news about prices getting low then they hurry towards panic selling and this plummets the price.  

Technological factors

Technology has its pros and cons. On one side, Bitcoins networks have improved a lot, it has made the investment easy so the buyers and sellers get attracted towards investing. Upgraded technology has increased the demand so you can easily buy bitcoins in Dubai or even buy bitcoin for cash.

On the other side, the hackers and scammers have scared the investors. People have lost the confidence to invest in buying and selling Bitcoin. 

Economic factors

Inflation or interest rates are the global economic factors that affect bitcoin volatility. Well, it is a good option if investors buy bitcoin for trading or buy bitcoin for cash during low rates but high inflation will make it tough to sell. 

Government regulations

Undoubtedly, government involvement somehow plays a great role. The Government has limited the cryptocurrency exchange or even banned it in many countries. This has negatively affected bitcoin volatility. However, if the government allows it then its acceptance can increase the demand for cryptocurrency. So far, good steps have been taken as you can find many platforms that are allowing crypto exchange in Dubai and you can easily buy bitcoins in Dubai.

Analyze Past Bitcoin Price Movements 

If you want to understand the present state and look for a fruitful future of Bitcoin then it is essential to analyze the past movement. Knowing history will help to make better decisions and help in risk tolerance. 

Bitcoin has a volatile history in the digital world. It was introduced in 2009 by Satoshi Nakamoto. Though it was designed for daily transaction use.  Fortunately, it gained so much attraction that it became a source of generating wealth. Furthermore, due to the interest of economists and investors, other cryptocurrencies were also developed in 2017.  

Now Let’s have a look at the past

  • You won't believe that Bitcoin was introduced with a price of zero in 2009 and began with a rate at $.09 in July 2010. 
  • In 2011, it reached $.30 but at the end of the year, the prices started dropping. 
  • 2012 was an unlucky year for Bitcoin as the prices remained low. But at the end of 2013, the prices increased rapidly around $.200 to $.1000.
  • The investors became rich in 2017 as the rate reached the peak of $.20,000. 
  • Unfortunately, the bubble burst and at the end of 2018, the prices dropped to $.4000. 
  • 2019, the pandemic COVID year was uneventful for bitcoin but at the end of 2020, the prices reached to $.29,000.
  • In 2021, the record was broken as it reached $.40,000 and went to $.63,000. The prices went up and down this whole year.
  • Till 2023 the prices remain fluctuated. 

So the point is that these ups and downs are normal in cryptocurrency. No one can predict the future but of course, analyzing the past can give you valuable insight.

Get Insights from Traders and Investors Dealing with Bitcoin

There is a wise saying, “The best are those who learn from the experiences of others”.

No doubt the Bitcoin market is full of risks. But some essential insights can help you deal better. According to long-term investors and traders:

  • One should invest a specific amount that they can afford to lose. Of course, if the rate increases, they will surely gain something.
  • Understand the technology before investing, it’s better to do research.
  • Working on psychological resilience is important. You need to be strong while the market fluctuates up and down.
  • Don't blindly believe in guaranteed results, or think of it as an easy money-making method.
  • Make a portfolio to keep things in mind.

No doubt, every individual has their own strategies and potential to handle the risk. But these insights will help you to learn from others' experiences.

Managing Volatility-Related Risks when Buying Bitcoin in Dubai 

Some strategies can help you to avoid risks while you buy bitcoins in Dubai.

  • Choose well-known exchanges for buying and selling in Dubai. 
  • Focus on long-term investment, don't get attracted to daily offers.
  • Buy when the prices are low and wait patiently for the market to rise.
  • During low volatility, learn to hold your bitcoins, and don’t rush to sell while experiencing panic.  
  • You can use secure wallets for saving purposes.
  • Do your research and avoid emotional decisions. 
  • Lastly, beware of scammers and hackers.

Conclusion  

In a nutshell, volatility is an unavoidable factor in the bitcoin market. The prices can go up and down unpredictably. However, along with negative results, there are more chances of getting positive results as well. So far, to avoid risks you should learn from other’s mistakes and experiences, and get knowledge as much as you can. Further, you can seek professional help as well. Most importantly maintain discipline and take steps while being calm and resilient.

Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.