Since the last decade, there has been considerable development in the international recognition of cryptocurrency. Some coins such as Bitcoin have gained immense popularity when famous personalities and companies started endorsing it. There are millions in the world, especially the millennials and the GenZs who are actively trading in cryptocurrency. There are several success stories which are motivational.
The visibility of cryptocurrency has also increased due to the media attention it has gained over the past couple of years. While all of the exposure is extremely good for people who actively invest in cryptocurrency, it does project crypto in a negative light.
The volatility of cryptocurrency is something that it is associated with the most. This is not only highly inappropriate but also disadvantageous because in ways it discourages people to have faith in crypto and invest. The Blockchain technology is by far one of the most secure systems of trading and investing in the world. Cryptocurrency is famous due to the merits of this technology. It has also been used by the United Nations and endorsed by NGOs all over the world because of the elimination of risks concerning middle men and corruption.
Young people around the world have used cryptocurrency to earn pocket money, increase their valuation, start a side hustle and even build a business. Hundreds of success stories have proved the benefit of investing in cryptocurrency. So, why is there the collective anxiety regarding its volatility?
Cryptocurrency’s volatile nature is not untrue. It is a proven fact that the market is still growing and a lot of factors affect the use of blockchain technology. However it is important to note that cryptocurrency is not the only form of investment that goes up and down daily. The situation is similar with stock trading as well. On the other hand, investment in gold, fixed deposits and savings accounts are far less volatile but these are also investments which pay less.Therefore, crypto provides more chances of making a substantial profit, but it comes with its own risks.
Here are some of the reasons that cause cryptocurrency to be volatile –
- It is a comparatively younger field of investment –
While stock trading and other forms of investments have been around for more than a century, cryptocurrency has hardly been around for more than a decade. Additionally there is anticipation in people who are in the investment sector. The competition with stocks and other age old investment techniques keeps it from gaining the trust of veterans.
- The Celebrity Impact –
The modern world, most of which lives on social media, is heavily impacted by influencer marketing. Celebrities are the biggest influencers who have the ability to bring a massive change in the perception of certain things.
Cryptocurrency has had its fair share of fame and endorsement by personalities such as Elon Musk.
One of the down-sides of this is the fact that just like an endorsement can make the market grow, the sign of a slight distrust can also have a detrimental effect on the market. It is exactly what happened when Elon Musk retracted his decision of accepting crypto for his company. Such incidents lead to fluctuations in the value of crypto and make it more volatile.
- It’s in the Developmental stage –
Blockchain technology is a great one. It has several characteristics which make it extremely efficient, but the truth is, it is still developing. With each passing day new advancements are happening and as opposed to the traditional forms of investing, it is thus more difficult to understand and comprehend. There is a continuous need to be updated about recent changes and secure investments accordingly. This often discourages people for whom cryptocurrency trading is not the main source of income.
- It’s virtual –
This is by far the biggest concern for most people. The fact that cryptocurrency is digital money makes it incomprehensible to most people. This is a prevalent thing among the older masses. The anxiety that crypto cannot be transformed into real money in banks makes people more anxious.
The anxiety around cryptocurrency is not unnatural due to the fact that it is still a new sector. But, at the end of the day, it is not any more volatile than stocks. You can find Crypto Genius regarding cryptocurrency. Proper awareness is the only way in which this volatility can be addressed.