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.
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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.
About the Author
Dave has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.