Why Bitcoin’s price is so volatile

In 2017, Bitcoin’s value soared from $1,000 to just under $20,000 before dropping down to around $13,000 at the end of the year. Since then, it’s value has risen and dropped sporadically from day to day, dragging smaller cryptocurrencies like Ether and Ripple along with it.

If you’re new to cryptocurrencies, this kind of volatility can be dizzying (and painful if you invest at the wrong time), but if you take a closer look it starts to make sense. Here’s why Bitcoin’s price keeps changing so drastically, and why it may get more stable in the future.

Bitcoin Is Still Very New

Bitcoin was first released in 2009, but it only really gained mainstream popularity in 2017. The technology is still extremely new and misunderstood, and that’s a big part of why it’s value is so hard to pin down.

Add to that the fact that most of the Bitcoin in the world is owned by a tiny group of people. As of late 2017, about 95 percent of the cryptocurrency was owned by just over four percent of people with Bitcoin, according to one report. That means that a single person could decide to release huge amounts of Bitcoin into the market at any moment, completely upending it’s value.

The price of Bitcoin can also change drastically as countries and financial institutions adapt to the idea of cryptocurrency. For example, when one of South Korea’s biggest banks tested out the technology it caused a spike in value. On the other hand, when China announced plans to crack down on sketchy Initial Coin Offerings (ICOs) the value of Bitcoin dropped, and the same thing happened when a South Korean government official said the country might ban cryptocurrencies altogether.

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Source: Why Bitcoin’s Price Is So Volatile – LifeHacker