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The high rate of volatility of Bitcoin has always been a major concern for investors over the years. This is due to the fact that they are usually exposed to losses whenever the market seems to be heading to an unfavorable direction. It has experienced about five major crashes since the year 2009. According to experts, the risk of investing in Bitcoin market is about 5 times higher than risks in other markets. For instance, its price rose by around 10% - 20% in the month of May 2019 and returned back to normal ($10k) after few hours.

Are you planning to invest in bitcoins? Do you know that understanding how its price volatility works can help you avoid the loss nightmare which most investors are experiencing? It is true that the market is highly unpredictable. However, such doesn’t imply that you can’t make great decisions to guard your investment.

What you need to know

The major aim of this post is to show you some of the reasons why Bitcoin market is very volatile and unpredictable. These will definitely help to ensure that you are making much better decisions where other investors seem to be getting it wrong.

High level of scarcity

When bitcoins came into existence in the year 2009, they weren’t as scarce as they are now. As the years are going by, they will become more scare due to the increasing number of investors in the market. This is one of the major reasons why its price experiences constant fluctuation. As of 2019, almost 18million tokens have been mined out of the available 21million tokens. The price will continue to experience serious fluctuations as the demand for it increases.

Advancing blockchain projects

This is another reason for the volatile nature of Bitcoin. According to investment experts, blockchain is the future due to some of its wonderful benefits which have led to many industries and sectors adopting its uses. For instance, it is highly transparent thereby bring about efficiency and effectiveness of systems. It is through the trading platform of bitcoin that blockchain transactions are carried out. As more innovations are coming up through the latter, that is how price of the former will be changing.

News is a factor

The media has been able to influence happenings in the cryptocurrencies market over the years to a great extent. For instance, in the month of January 2019, there were rumours that the bitcoin market would experience a drop in price. This news influenced the decisions of investors.


In order to give an apt description of speculation, 3 words need to be used – greed, unpredictability and fickle. This is why it is playing a major in the constant fluctuation of the Bitcoin market price. Investors are only interested in the market price of tomorrow. When there is new information about the market, speculative demand is likely to be affected. This will in turn affect the price of bitcoins. It is only a question whether such information will be favorable or not.