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Virtual coins have been dominating the news cycles worldwide due to their novelty and the inebriating potential to enrich people overnight.

The one thing that permanently ingrained cryptocurrency so deeply in our collective psyche is their volatility. In 2017, Bitcoin has experienced a meteoric ascent, reaching $20.000, only to crash below $6000 at the beginning of February. So how much can the value of cryptocurrency fluctuate?

Factors that Cause the Fluctuations in Value

Cryptocurrency is far from being an exact science, but by following the existing data, we can determine the factors that influence its volatility.

• Unlike other types of currencies, virtual coins do not have an intrinsic value. Bitcoin, for example, is similar to gold in that it is judged as a commodity, not an asset.

• The developers which created the core technology behind Bitcoin set a production limit of 21 million coins, which creates an artificial scarcity upon which the value fluctuates.

• Further on, cryptocurrency value is dependent and determined by public perception. This can be influenced by many factors, such as good or bad news stories, political turmoil or even posts shared by influencers on social media portals – although some publications have adopted an editorial policy of restraintwhen it comes to reporting Bitcoin’s market value.

• News stories of criminal acts related to cryptocurrencies, such as hacks and security breaches might incentivize investors to hold on to their coins much longer before selling. This takes us back to the artificial scarcity mentioned above – since there are only so many coins available to be transacted and the big players are holding on to them, the value can potentially rise. Alternatively, the opposite scenario can also occur, in which the low level of public confidence in the coin can send its value down the drain.

~ 10 Years of High Fluctuation

According to various financial analysists, Bitcoin will continue to fluctuate for the next ten years, or even more if events continue to unfold in the same rhythm.

Kristjan Dakleva, a finance expert at cryptocurrency project Edge, has compared Bitcoin’s rise to the DotCom bubble of the 1990’s. Similarly, many investors jumped on the bandwagon and when the bubble eventually burst, they lost everything. After a few years, he says, when the mainstream will fully accept digital currencies as official commodities, they will finally reach a level of stability.

As for the scenario in which virtual coins will replace traditional currencies, Kristjan Dakleva believes that, while they will become the only way certain people make transactions, central banks will prevent them from completely overtaking the Dollar, Euro or other well-established currencies. It is more likely that they will equally share the market, without cannibalizing one another and completely changing the financial landscape of the world.

What Will You Do?

Taking into account these fluctuation scenarios and vouching on the best bitcoin trading indicators, many will count themselves amongst the winners of the most powerful “game” in the world. Speculation is the core of this domain, but that’s exactly what makes it so alluring.

Like the California Gold Rush of the mid-1800’s, expert and rookie investors are jumping on the bandwagon, hoping to steer their fluctuations in value to their advantage and become rich overnight.

One can never know for sure the result of a cryptocurrency investment, but knowledge, calculated risk, experience and a poignant intuition always make the difference.

www.AdmiralMarkets.com