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What Makes Cryptocurrencies So Volatile?

1. The Market Impact

The first cryptocurrency was launched in 2009, and ever since, it has received a tremendous amount of attention. But it is still regarded as an “Emerging Market”. The reason it is called an emerging market is in comparison with the other market approaches such as the stock market, forex market, gold market, and so forth.

2. Intrinsic Value

Cryptocurrency is believed to have little to no intrinsic value, since it is treated as a digital asset that is not backed by anyone or anything such as physical commodity or currency. Few cryptos have no intrinsic value, while others can be considered to have some intrinsic value because of their use-cases. There are theories that cryptos are entitled to intrinsic value due to their mining process. Thus, many believe that the change in the prices of cryptocurrency is purely based on speculations.

3. Speculations

Cryptocurrency as an investment is based on speculations; wherein, the investor works on guesswork whether the price will move upward or downward, leading to buying and selling of cryptocurrency. Whereas, many investors are constantly working on this process of betting, causing further price volatility.



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