Bitcoin is Not Vulnerable to the Correlation Effect

 

Some Bitcoin skeptics are questioning the volatility of the currency due to an ongoing debate about the availability of mining Bitcoin. While some believe the price of the currency will increase in the future, others believe that the industry is too unstable to support.

For the skeptics who see volatility as a negative characteristic of a currency, it is a difficult pill to swallow. The market for Bitcoin is still nascent and still growing at a rapid pace. Because of this, a large amount of speculation has occurred regarding future price fluctuations and the viability of the Bitcoin industry.

Some of the arguments put forth for why Bitcoin is not as stable as a traditional currency include the fact that business opportunities are becoming more prevalent worldwide. The ease with which this currency can be traded means that it can be traded easily throughout the world. As a result, many individuals with limited knowledge of the Chinese and South American economies may take to the currency. Meanwhile, South Americans, who have historically seen Bitcoin as being the currency of choice, is likely to be more bullish on the currency than any other country in the world.

Although the volatility of the currency is often cited as the reason why Bitcoin is not as stable as traditional money, it is also because of the speed at which it is traded. Because of this, a large number of individuals have been exposed to the currency in a relatively short period of time.

With regards to stable currencies, the U.S. dollar is considered the most stable due to its status as a safe haven. This is because the U.S. dollar is able to provide the same level of security for businesses across the world that the British pound provides. Therefore, many countries view the U.S. dollar as a safe haven from the volatility of a volatile currency like Bitcoin.

Even with regard to the fluctuation of other currencies around the world, there is no one that can point to an example of where Bitcoin is more stable than any other currency. This is because of the fact that most markets fluctuate around the same trend and create similar results for traders. The volatility of the currency does not necessarily affect the stability of the system, but rather the volatility of the market is usually enough to shift market prices and cause the prices to fluctuate slightly.

Stability is not guaranteed by all. With regards to the volatility of the market, Bitcoin is known for its ability to fluctuate rapidly. When investors first discover the network, there can be large swings in the value of the currency, which can cause a larger loss in a short period of time.

Nevertheless, Bitcoin is not without market stability. Due to the fact that the system is globally recognized, this network has the ability to greatly influence the price of the currency in a global sense. Due to the volatility of the currency, it is advisable to make a good and informed decision when investing in Bitcoin.