Why is Bitcoin’s price so volatile?

[Lock_Tightt]

Bitcoin is often described as a long-term store of value, yet its price frequently moves sideways or declines for extended periods. In principle, buyers and sellers generally avoid transactions that intentionally reduce value, since buying/selling at a lower Bitcoin price weakens perceived value and harms both parties. the seller says “I will not sell any amount, even 0.00000001 BTC, for less than $1.43 per BTC.” the buyer buys what they can afford. Given this, what factors cause Bitcoin’s price to fluctuate - aren't there always buyers at the standard market price?

[Plaguedeath]

When they have emergency, they will sell their coins at lower price because they really need it.

Some of them sell the coins because they're not confident with themselves for holding longer.

Other than that, we can expect they will sell their coins when the price are higher than what they bought.

Even though 1 BTC = 1 BTC, but in the reality, almost all people treat 1 BTC = ... $ before they want to sell or buy Bitcoin.

[coolcoinz]

"Often declines for extended periods of time" - what do you mean?
Say you had  bitcoin trading at lows of $75k this year and then it went up a bit and down a bit, but is still higher than these lows. I'd say that bitcoin is a good store of value because it stays in a certain range. I don't think that it's going to experience year long bear markets where it falls 70% anymore and as it matures these ranges will become tighter. IMO there are people effectively trying to flush out leverage from the system to make bitcoin less volatile. They are preparing it for becoming a global asset. These sovereign funds and banks don't want gamblers to play with 100% leverage, so they are wiping them out, scaring them away.

Bitcoin is mainly volatile due to two things. One is high leverage that people are using and the other low exchange liquidity and not much market depth. This means that there's not much open orders on exchanges outside this tight range that bitcoin is in. For instance, if bitcoin is at $90k you have a lot of open orders all the way down to something like 75k and then there's nothing. If you break a certain range by dumping a lot of bitcoin in a short time you're going to get a large red candle below the liquidity range and nobody knows how big it will be. If we were to break 75k to the downside somehow, you could see the market crash $20k almost instantly. On the other hand, breaking above $110k would probably take us to a new high.

If you're new to bitcoin, take my advice and don't react to these panic moves. Make a move only when you feel comfortable buying and selling at a given price. Don't worry about how much it went up or down or that someone is crashing the price or pumping it. These moves are temporary and meant to make you react.

[Lock_Tightt]

People are trying to buy it at below market value? Why? Why not just buy it at market value?

[Moreno233]

Bitcoin price is volatile just like gold, silver, crude oil, indices, and the various fiat currencies that are traded in the forex market, they are volatile because that is their way of responding to the market in terms of demand and supply. Anything that experiences these forces of demand and supply will become highly volatile. The side ways movement in price signify a time in which the demand is about the same as the supply such that the market arrive at pseudo equilibrium.

[Cookdata]

Bitcoin is often described as a long-term store of value, yet its price frequently moves sideways or declines for extended periods. In principle, buyers and sellers generally avoid transactions that intentionally reduce value, since buying/selling at a lower Bitcoin price weakens perceived value and harms both parties. the seller says “I will not sell any amount, even 0.00000001 BTC, for less than $1.43 per BTC.” the buyer buys what they can afford. Given this, what factors cause Bitcoin’s price to fluctuate - aren't there always buyers at the standard market price?

You are one sided and it's not good to speak ill of Bitcoin. When Bitcoin was trading volatile and the market was going up you didn't ask about what was the reason behind the mathematical price surge, it's when it's going side ways and dump it became a problem.

Anyways, here is the simple logic. When people are willing to spend the amount they have available for limited Bitcoin, expect the price to move up, sometimes when there is bull run of Bitcoin, the sell side becomes too thin with Bitcoin and the buy side becomes too wide with different prices chasing small Bitcoin and similarly, this is what happened when the price fall or sideways when the price isn't going up.

What's happening right now with Bitcoin price, consider it as manipulation. There is absolutely nothing bearish about this market but time will tell.

[KingsDen]

Re: Why is Bitcoin’s price so volatile?

It has been very long I last head the complaint of Bitcoin price volatility. This is because we have enjoyed the bull run for so long that we no longer complain about bitcoin price fluctuation. If the price is positively volatile, we don't complain, we enjoy it and wish it continues on the positive trend. But immediately the price reverses, then we'll begin to know how volatile bitcoin is.

Right from day one, bitcoin has been a volatile asset so we should not be surprised if it continues to do what it is known for. We are only being sentimental about it because some people have projected that when mass adoption happens bitcoin price will become less volatile. Now it is not happening so.

[SanZoldyck]

When they have emergency, they will sell their coins at lower price because they really need it.

Some of them sell the coins because they're not confident with themselves for holding longer.

Other than that, we can expect they will sell their coins when the price are higher than what they bought.

Even though 1 BTC = 1 BTC, but in the reality, almost all people treat 1 BTC = ... $ before they want to sell or buy Bitcoin.

As you rightly say, when you're drowning in debt due to an emergency, the HODL philosophy goes out the window. You sell at any price, even at a loss, because you need fiat currency now. The current price of Bitcoin, hovering around $62,185.34, is irrelevant when you need to pay the hospital bill. It's the harsh reality of survival.

[Ambatman]

what factors cause Bitcoin’s price to fluctuate - aren't there always buyers at the standard market price?

Well the forces of demand and supply decides it's price keeping manipulations constant
Since price are usually based on the demand and supply via exchanges.
There's no investment that's truly stable or lacks volatility. Everything is relative.
Bitcoin is relatively young and MC or supply value in circulation isn't huge enough that a billion dollar wouldn't make an impact.

Works like this
Seller A wants to sell Bitcoin for $100K
Buyer A wants to buy for $90K
None is meeting any of their targets. Now the market isn't just two forces.
If the sellers are more than buyers
Many would want to sell cheaper to they can attract buyers and wants it's executed it becomes the selling price
And vice versa
This relationship can be affected by various factors not excluding news.

[lornadane]

Tbh, volatility is just part of Bitcoin. Supply is fixed, but demand swings a lot. News, regulations, big whales moving coins, or tweets can cause huge moves. If you’re new, expect wild ups and downs — that’s normal.

[IjawMan]

Re: Why is Bitcoin’s price so volatile?

It has been very long I last head the complaint of Bitcoin price volatility. This is because we have enjoyed the bull run for so long that we no longer complain about bitcoin price fluctuation. If the price is positively volatile, we don't complain, we enjoy it and wish it continues on the positive trend. But immediately the price reverses, then we'll begin to know how volatile bitcoin is.

Without volatility of market demand and supply bitcoin price will not have reached the all time high standard it is presently at but, many do not think about that, they enjoy the beauty of the volatility when price is going up, surging to the profit of their bitcoin stash and complain when it dropping, both from volatility.

It is a common phenomenon with bitcoin price moving sideways creating opportunities for all traders and investors to enter the market at their own timing where profit can be made. While a handful complain, others are taking advantage of the price reverse.

[bitmover]

Bitcoin is not the only volatile asset in the world. It is not even the most volatitle asset.

Gold is very volatile as well.

Recently, tech stock were also very volatitle, and nvidia was way more volatile than bitcoin.

It is a high risk asset , with many uncertainties and regulations are being made. That causes volatility

[Zlantann]

People are trying to buy it at below market value? Why? Why not just buy it at market value?

In the market, people want to buy at a price below the market rate because it will make them make more profit. What will determine whether they will get the product at a cheaper rate or a more expensive rate is the supply. If the supply is low, it will be hard to buy below the market price and vice versa. The same thing happens in the crude, gold, and other asset markets. The price of Bitcoin will always be volatile since it is affected by several economic and political decisions in countries with the biggest economies in the world.   

[jostorres]

Bitcoin is not the only volatile asset in the world. It is not even the most volatitle asset.

Gold is very volatile as well.

Recently, tech stock were also very volatitle, and nvidia was way more volatile than bitcoin.

It is a high risk asset , with many uncertainties and regulations are being made. That causes volatility

To be honest, that was surprising to hear from a forum veteran like you, or maybe things really have changed now? But only or at least for a while? Only because those things that you have said there are now trending. And once their trend subsides, things are going back to normal again. And then Bitcoin is now the king of being a volatile asset again. The items that you mentioned here or their volatility are much better than the high volatility of the meme coins because if you missed the chance of selling them at the top, you won't get totally bankrupt and even have the chance to see a recovery or even earn more, as the price exceeds on your buying point.

[BIT-BENDER]

Bitcoin is often described as a long-term store of value, yet its price frequently moves sideways or declines for extended periods. In principle, buyers and sellers generally avoid transactions that intentionally reduce value, since buying/selling at a lower Bitcoin price weakens perceived value and harms both parties. the seller says “I will not sell any amount, even 0.00000001 BTC, for less than $1.43 per BTC.” the buyer buys what they can afford. Given this, what factors cause Bitcoin’s price to fluctuate - aren't there always buyers at the standard market price?

Well I will assume you aren't the smartest economists, the factors that causes Bitcoin or anything price to Fluctuate is demand and supply, like if Bitcoin demand goes high and the supply is low the price will fluctuate and go up, if the demand is low and the supply is high it fluctuate again and goes low.
The later can be from buyers scared to buy and sellers panicking to sell while the former can be from sellers refusing to sell and buyers wanting to buy this is just the science and nature of demand and supply.

[leonair]

Bitcoin is often described as a long-term store of value, yet its price frequently moves sideways or declines for extended periods. In principle, buyers and sellers generally avoid transactions that intentionally reduce value, since buying/selling at a lower Bitcoin price weakens perceived value and harms both parties. the seller says “I will not sell any amount, even 0.00000001 BTC, for less than $1.43 per BTC.” the buyer buys what they can afford. Given this, what factors cause Bitcoin’s price to fluctuate - aren't there always buyers at the standard market price?

Bitcoin prices are volatile, that's the nature of Bitcoin. And knowing this, someone invests in Bitcoin and waits for the price to increase because if the price increases, they can sell it and make a profit. However, some people panic and sell their Bitcoins when they see volatility, while others sell Bitcoins for emergencies because they need it the most at that time. However, to make a profit from Bitcoin, you must hold it for a long time, in which case volatility is not a factor.

[boyptc]

People are trying to buy it at below market value? Why? Why not just buy it at market value?

It's a free and speculative market, and that's why everyone is free also to put their buying/selling price freely.

The market will still decide if those orders are going to be hit based on how much it will move.

Lucky they are if the market hits the price that they have set and it's the affordable and lower amount for them if they are buying, and oppositely good if that's the selling price which fluctuated higher.

[gibrab16]

Main reason is supply vs demand. BTC has fixed supply, but demand swings a lot. When money rushes in or out, price moves fast. Add low liquidity compared to stocks and you get big candles.

[DubemIfedigbo001]

aren't there always buyers at the standard market price?

What do you mean by a standard market price?

Bitcoin price has no standards, they price always fluctuates due to its volatility which is not a new thing. Bitcoin has an active market of buyers and sellers and everyone is at a liberty of holding until the desired price for them to sell, same way buyers can wait until the price dips to their choice to buy, or they can still buy from any entry point. That is the beauty of its decentralization, nobody makes trade choices for anyone.

In this bull run, we experienced the least volatility of bitcoin, Bitcoin has been more volatile after previous halvings. Bitcoin is seeing more stable investors currently who are holding it rather than those who are quick profit minded. Bitcoin is not the only volatile asset, volatility in it is not a strange thing, so it shouldn't be as concerning as you're presenting it.

[lornadane]

Interesting topic, OP. Are you asking from a trading perspective or just general curiosity? Volatility affects hodlers, traders, and miners differently, so the “why” can have multiple layers.