The challenge of the cryptocurrency market being very volatile has been discussed in several tables, from news rooms to conferences and even by the government who even try to use this reason to dim the light of this emerging technology. Without doubt, cryptocurrency markets has long been a realm of staggering highs and an inevitable low; or should I say very highs and very lows, exhibiting volatility levels that can leave dramas to investors year in year out.
Even seasonal investors have been caught in the market trap overtime. Don't be mistaken, this high speed ups and down is not solely dictated by abstract market forces or algorithms; instead, it finds its roots in the actions and behaviors of people, who play a pivotal role in shaping the market's wild swings. At the heart of cryptocurrency market volatility lies solely in the human psyche. Forget about the technological advancement or the use of bots to track and trade the market. In short, it is this human short lived gains activities that continue to deprive trust to the crypto market.
Every action made by bot, is as a result of the people's current market decision. Market emotions like fear, greed, and FOMO are the major drivers of market sentiment. The fact is, this emotion does not happen to the market but rather to people in the market, it pushes investors to make impulsive decisions. For instance of positive news spreading, a rush of FOMO can trigger a buying frenzy, leading to rapid price increase. So the question here should be, who spreads the positive news?Who rushed to buy? And who increased the market price? Was it bots, was it machines or was it the market itself. Inasmuch as all these may play some variable parts, the key player have always been people.
On the other hand, fear or negative sentiments can result in panic selling, causing dramatic drops in prices. I was having a discussion with a friend on the hive chain yesterday about the future of the crypto market this 2024 and he talked about the repeated cycle in the cryptoverse every four years. I guess a lot think the market is ripe again. Was he wrong? Absolutely not. This action has been repeating itself over time now and it may look as if it's the market that effects this but this is not true. Without people the market can do nothing. What we call a market cycle is a group of investors repeating their market strategy to fire out market gains. If it actually always repeats itself, why in the end do we have those who will lose in the process?
Are we too volatile?
Without mixing words, a lot of crypto enthusiasts for me seem to be too volatile. I guess we do not really trust what blockchain technology brought to the table. Imagine bitcoin dropping from an all time high of over $68,000 to under $16,000 within some couple of months. I know you may say the pressure was too big to bear, with SEC and several government bodies around the world drawing accusations to the cryptoverse,stating its negative usage. It was banned in several countries in the process. Was crypto dead in the process? No, so why did so many investors pull out even in non restricted countries? The market was slow and I have come to realize a lot of crypto investors don't like a slow market.
Everyone wants to cash out soon, this has given opportunity for markets to be easily manipulated, you know some fake speculation drawing attention to increase your holdings not because you love the projects but because you expect a short lived interest soonest. The crypto market has become a breeding space for short term lived investors, no one is bothered about a steady, near-stable and effective market. Do we even come to realize that our market is traditionally small, a small market mixed with short term or should I say get rich quick investors equals volatility. A lot of whale investors have also swam into this market to cause highs and lows. You know, the tricks of leveraging the media; they say one thing, they invest and it is followed by a market pump and boom, they pull out with some interest. Can't really hold them for the tactics, rather people who are so desperate that they fall for it.
Let's think long term
Enough of running after a bullish market, it's a trap set mostly by whale investors to snare the medium and uneducated ones. Crypto markets will continue to show all sorts of volatility attributes until the people, not the market changes. A lot of news and market sentiments need to be ignored if we want to move from this stage to the other. How sweet it would be to hear that a currency like for instance BTC swung within $48,000 to $50,000 in the next one year.
You may feel you are at loss, believe me the reputation this would add to the cryptoverse would attract a lot of investors. Why do you think a lot of big businesses are still shying off the crypto market, they fear once their assets land on the chains, older investors will be pulling out. Volatility is more of a proof that we are not well coordinated as a market. We need more crypto enthusiasts if we wish to make our voice heard in places we are yet to dominate.
To conclude let me add, no even a dot changes in the market until humans effect it. When next you want to accuse the cryptoverse of being too volatile, start first from what makes the market which is the people. Volatility will end in this market when we value decentralized transactions over quick buys and sell to make short lived gains. The future of crypto is in our hands to make, either we decide to make it volatile and scare off potential investors or we wake up to decentralized, volatile free markets which is what this market is due to compete with other systems.