Ethereum: Does speculation hurt bitcoin?
Is speculation by damaging Bitcoin?
The debate on the impact of speculation on bitcoin was a controversial problem among fans and cryptocurrency analysts. While some argue that speculation is responsible for the volatility of Bitcoin, others argue that this does not significantly affect the price.
In this article, we are immersed in the world of speculation and reveal that Bitcoin really hurts or there are other factors.
What is speculation?
Speculation refers to the purchase or sale of safety in the context of finance, based on expectations for future price movements, not currently current market prices. This can be done with various types of activities, including actions, goods and currencies.
In Bitcoin, speculation is a bet on investors that the value of the cryptocurrency will increase over time, which will make them buy before the price increases. On the contrary, others sell their bitcoin at high prices, expecting that their value decreases later.
Effect of speculation on bitcoin
When speculation becomes excessive or dominates market emotions, it can lead to significant price samples. This is exactly what happened during the Bull Run 2017, in which speculative merchants went from around $ 1,000 to $ 20,000 in a few weeks.
However, some claim that this increase is unsustainable and in the end led to repair. During this period, Bitcoin price dropped by over 80% before stabilizing about $ 3,500.
Is speculation by damaging Bitcoin?
So, mirror hurts Bitcoin?
In short, yes, speculations can have a negative impact on the general movement of Bitcoin prices. When investors acquire a large amount of bitcoin to predict their price increases, they can increase demand and increase the highest prices. On the contrary, the prices are increased too quickly or too long, this can lead to repair, as can be seen during the 2017 Taurus race.
In addition, speculations can create market volatility, which can be a greater challenge for investors in providing for price movements and increasing the risk for buyers and sellers.
But is speculation harmless?
Although speculative activity can contribute to price fluctuations, some argue that this is not a primary Bitcoin engine. Instead, they indicate other factors, for example:
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- Innovation : New technologies and innovations can make Bitcoin more attractive or usable as a deposit.
In addition, some experts claim that speculation is no longer significant than ever. The cryptocurrency market has developed significantly since the initial day of Bitcoin and more sophisticated investors and traders dominate space.
Conclusion
The effect of speculation on the price of Bitcoin is complex and diversified. Although speculative activity can contribute to price fluctuations, excessive or dominant market emotions can lead to improvements and volatility. Other factors such as the offer and demand, the effects of the network, the innovation and the reduced speculative activity contribute significantly to the general value and the stability of the cryptocurrency.
Finally, it is essential that investors approach Bitcoin with a faded perspective, recognizing all the potential benefits and risks relating to speculation. By understanding the dynamics of the game and the information on market conditions, people can make more rounded investment decisions.
** Related question: does the accumulation really hurt Bitcoin?