The biggest problem with cryptocurrency is price instability. No one can predict how it will go next. Even by 2019, its price trend is still unpredictable.
In 2009, Nakamoto issued the world’s first cryptocurrency, Bitcoin. Until now, there are already more than 1600 cryptocurrencies on the market. The cryptocurrencies have been developed for almost 10 years and have now become a trend, a trend. Last year’s stock market was the least volatile in decades, and transactions that historically benefited from price fluctuations have given up their work to computer algorithms. On Wall Street, mankind is a commodity that has been replaced by machines. In the one-month price change of the cryptocurrency market, it is comparable to the four-year fluctuation of the stock market.
This is a terrible fact. Experienced investors will understand this fact, but do you know why the price of cryptocurrencies fluctuates so much?
1. No actual value
It is because cryptocurrencies are abstract that people cannot see or touch. For example, some cryptocurrency IDT and XID that have just been issued or have been issued for a long time, and despite the company's valuation scale, cryptocurrencies do not sell products and earn thousands of dollars in revenue. They usually do not return palliatives, but instead part of the total value of money goes into the development phase. Therefore, it is difficult for us to define the value of cryptocurrency and we do not know whether the price should be set at a high or low level. If we do not have any basic knowledge to reconstruct this information, we will have to rely on market sentiment. This is often the result of media making money. the way.
2. Lack of supervision
Cryptocurrency is a worldwide phenomenon. Although the government is suppressing this industry, supervision is still at an early stage. At the beginning, whether it is Bitcoin or Altcoins, IFC has begun to be strictly controlled by state agencies. This limited supervision allows market manipulation, which in turn causes fluctuations and hinders institutional investment because large funds cannot guarantee the real safety of their capital. Or at least protected from harm by these bad actors.
3. Lack of institutional capital
It is undeniable that some fairly well-known venture capital firms, hedge funds and high-net-worth individuals are all encrypted fans and investors. As a market segment, most institutional capital is still waiting to be seen. At present, our motivation for W3C or mutual funds is limited. Most bank leaders acknowledge that there is some validity in this area but have not yet publicly undertaken significant capital or participation. There are many forms of institutional capital, such as large trading platforms that can increase efficiency and ease market volatility, or buy funds on behalf of long-term investors.
When will the fluctuations decrease?
Over time, we can expect more regulation, more investors and more mature encryption market prospects. We can also look forward to higher practical value because businesses find ways to more easily accept cryptocurrencies and the technology behind the transactions has also improved. Although volatility may decline, we can also expect the value of the entire cryptocurrency market to gradually increase steadily. Just as the stock market has given way to long-term holders, so will the cryptocurrency market. At least, this seems to be a reality in the long run.