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Understanding Volatility and Risk
Crypto is considered volatile because of how much and how quickly its value can change. And while there's potential for profit if your crypto goes up in value, you also face the risk of losing money if the value goes down. Here are some factors that may help to understand why crypto is volatile.
It's still pretty new
Crypto has grown significantly since the introduction of Bitcoin in 2009. But it's still relatively young compared to centuries-old stock markets around the world. Volatility is part of the growing pains as the market reacts to each new development.
Innovation is a big factor
Every day, people around the world are developing new cryptos and apps to advance the technology. Some ideas are full of potential, some ideas don't pan out. And because innovations affect the rate of adoption, each success and failure can have a strong impact on the entire crypto market.
Rate of adoption is low so far
The reality is you can't spend crypto just anywhere, at least not yet. The next big leap for crypto could occur once it's widely accepted by merchants. If any one crypto reaches the point of stable and universal adoption, many believe that market prices will also stabilize.
Last modified 5mo ago