As we approach 2021, there is great excitement among investors about cryptocurrencies. In addition, crypto investors have always been inclined to Bitcoin. With Bitcoin climbing to $ 19,000 in November, it is expected to break the all-time high in the coming days. In addition, experts say it will break the $ 1 million mark.
However, will Bitcoin remain stable in 2021? Well, there are several affinities that affect Bitcoin's stability. We'll discuss each factor, but before that we know how stable Bitcoin is today.
How stable is Bitcoin today?
After the pandemic, the price of Bitcoin continues to rise, reaching the USD 19,000 level in November. However, the daily volatility remains at 3.5%, which is well above any other currency or asset. Usually, most fiat currencies have a volatility between 0.5% and a maximum of 1%. It shows that Bitcoin is still not stable, but it is uncertain whether it will be stable next year.
Why is it volatile?
Bitcoin is volatile as it affects the FOMO effect. Aside from the FOMO effect in the crypto space, news, tax treatment, lack of regulations and a few other reasons cause volatility.
Since Bitcoin has remained volatile from the start, news plays an important role. When there is good news, people invest more in it and the price goes up. Likewise, people are scared when there is negative news.
Recently, the PayPal announcement had a positive impact on the price of Bitcoin. Bitcoin's market capitalization passed its all-time high again this year. There are also several updates on Bitcoin on the internet that are expected to break their record in a few days. So the price may go up, but there is no certainty about its stability.
2. Tax treatment
The tax treatment of Bitcoin varies across the world. Different countries treat it differently and it has a huge impact on volatility. Although the US government recently announced special tax rules, that may change as Joe Biden was elected as the new President of the United States.
3. Lack of regulation
Another important factor leading to bitcoin price instability is the lack of regulation. Finance leaders, bankers, and lawmakers are still not happy with how Bitcoin works. While they haven't rejected the entire concept, they want stricter regulations. Here, too, a positive reaction from the banks is driving the price up.
4. High number of crypto exchanges
The crypto industry gives every individual the freedom that everyone can create their own crypto exchange. As a result, many users create a crypto exchange that does not have proper regulatory compliance and sufficient trading volume on their platform. At the same time, price manipulation has a major impact on price volatility.
5. Price manipulation
Last but not least, price manipulation also takes place in the crypto room. If you go through the past data, you will find evidence of price manipulation. This type of activity is carried out by people who are veterans of the crypto trading industry and who use the price manipulation trick to enter the market at an optimal point.
All of the above reasons fluctuate the price of Bitcoin. Regardless of the instability, many people are interested as crypto experts predict that Bitcoin will cross the $ 1 million mark.
Additionally, Citibank's forecast has led more and more people to invest in Bitcoin. Tom Fitzpatrick, a senior citizen of Citibank, expects the price of Bitcoin to hit $ 318,000 by the end of 2021. As a result, many crypto investors are investing in Bitcoin through the open Bitcoin evolution account.
The bottom line
From various angles, it is not clear that Bitcoin will be stable over the next year. While the next Bitcoin revolution is so exciting in 2021, it's hard to say how stable it is.
About the author
Vipul is a professional blogger and online advertiser based out of Bengaluru, India. Always on the lookout for new ways to make money, Vipul explains all the possible ways that can help anyone make passive income online. You can connect on Twitter, Linkedin & Facebook