I am wondering why Bitcoin price is much more volatile than the stock market?
Let's just stick with Bitcoin only. Bitcoin have a market cap close to $1T as we speak and, yet, its price is still so volatile. Is it because the availability of bitcoins in the market is low as most people (especially the new institutional investors) are hodling?
Is it fair to compare Bitcoin (or crypto market as a whole) to a stock market like SP 500 (which currently has $31.61 trillion market cap)? If so, Bitcoin cap is only 3% of the SP500. Is it because of its relatively lower market cap which make it easier for its price to be manipulated (i.e., by a pump-and-dump)?
What do you think?
I think the main reason why Bitcoin is volatile is the fact that most people buy only a small amount of btc, and, yes, probably they rarely trade with what they have partially. Those who are interested in long-term investments just hodl, and the ones who are using btc for money transfer probably sell it right away, so that the price volatility won't affect the amount they send/receive. So, as a result, only a few people (relatively to all the btc users) acquire btc in large quantities and "play with it". And when they do - it affects the price drastically, because of their large-volume transactions that account for a big part of daily trading volume.