But as crazy as the Bitcoin market has been – just take a look at the timeline – the lack of any major news over the past few weeks has had a distinct calming effect on the digital currency.
After the CoinDesk Bitcoin Price index sunk just below $450 on April 25, it traded in a narrow range between $460 and $420 for the next couple of weeks. And the week leading up to yesterday (Tuesday), the Bitcoin price was very quiet, trading in the mid $440s.
The drop in Bitcoin price volatility – and the decrease in sensitivity to news and rumors – is a step toward the maturation of the Bitcoin market.
That's not to say a major announcement won't affect the Bitcoin market. All markets are affected by major news. But from here we should see less severe reactions to big news in the Bitcoin market and much more muted reactions to minor news and rumors than we saw last year.
Part of the reason is that the big price drops, combined with such disasters as the Mt. Gox bankruptcy, have flushed out many of the speculators that were driving the volatility.
Replacing them are more buy-and-hold investors looking at Bitcoin as just another asset class, and, most importantly, people who are buying Bitcoin to spend as more merchants agree to accept the digital currency.
Note: The tech sector has been hit hard this year, but it's still by far the best place to invest your money for maximum growth. Here are the top two tech sectors for 2014…
More stability going forward should prove another crucial factor in the broader adoption of Bitcoin. One of the issues that has held Bitcoin back is that it's too risky to bother with. As that changes, more and more people will feel comfortable using it.