Post
Topic
Board Speculation
Re: Should bitcoin rise and fall?
by
Hell-raiser
on 10/05/2018, 14:45:16 UTC
A lot of people compared to the market value of the dollar, so even if they came out, one bitcoin was worth $20,000, $100,000. Many people think that a good currency should not be a big flop. A widely used currency should not rise and fall. The problem, however, is that bitcoin is not mature at this stage. Conversely, assuming that the current price does not rise and fall, how many people will rush into the exchanges?

People make all sorts of assumptions but they forget to do a simple reality check on them. In this case specifically, the assumption that the price of Bitcoin remains stable is an impossible thing in and of itself. The explanation why it is impossible is rather simple though. As a speculative asset, Bitcoin can't be stable, full stop here. If it happens so that its price remains stable for some time, people will soon get bored with it as they are looking for volatility and profits. They will quickly start to leave this market, but leaving means selling, and that, in turn, means a major price correction. It may work in reverse too.

An interesting implication is that the longer the price remains stable for whatever reason if if purely by chance, the stronger the next price move should be. Despite being somewhat counterintuitive (since this is not what people typically expect), it can be used as a reliable market indicator.