The following information is for educational purposes only and does not constitute an endorsement of this type of Cryptocurrency. Consider seeking tax and financial advice from licensed professionals.
Cryptocurrency is considered volatile because of how much and how quickly its value can change unexpectedly. Here are some factors that may help to explain why Cryptocurrency is volatile.
It’s still pretty new
Cryptocurrency has grown significantly since the introduction of Bitcoin in 2009. But it’s still relatively young compared to centuries-old stock markets around the world. Volatility is part of the growing pains as the market reacts to each new development.
Innovation is a big factor
Every day, people around the world are developing new Cryptocurrencies and apps to advance the technology. Some ideas are full of potential, some ideas don’t pan out. And because innovations affect the rate of adoption, each success and failure can have a strong impact on the entire Cryptocurrency market.
Rate of adoption is low so far
The reality is you can’t spend Cryptocurrency just anywhere, at least not yet. The next big leap for Cryptocurrency could occur once it’s widely accepted by merchants. While market prices could stabilize If anyone Cryptocurrency reaches the point of stable and universal adoption, we don’t fully know the effect any change would have on value.
Due to the risk and volatility associated with Cryptocurrency, we would recommend that you speak with a tax and financial specialist before you begin participating in Cryptocurrency transactions. This will help you be informed and decide if and how you want to interact with this digital currency.