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)?
I believe it's because of a simple reason - The BTC market is still new and still in propagation phase from one user to another and hence the demand in the market increases day by day. The reason you see why it drops is because there are some investors who invested early in BTC and they have the power to sell some BTC and bring the market down. Some are even playing with this kind of power, they have big amount of coins and they dump, buy at a cheaper price and then again repeat the same. It can go wrong too at times though, if the market doesn't drop as much they expect.
When we talk about stock market, because of the nature of stocks being centralized there is always a track of who holds how much and hence there is not much manipulation that can happen.
Just consider someone bought a pizza for 10000 BTC and I am giving this example just to emphasize how cheap BTC was in past and if someone by chance bought 100k BTC, they can play with the market and hence the big fluctuations and manipulations.