Opinion Bitcoin Market Volatility is hurting its Smallest Users

Bitcoin Market Volatility is hurting its Smallest Users

January 16, 2021

In recent days, bitcoin and the entire crypto market once again witnessed incredible levels of volatility. The week began with a drop in the market capitalization and price of bitcoin, which was followed by the slide in the alternative markets as well. Many analysts were certain that this is the end of the present bull run which took the price of BTC well beyond the 40,000 USD range. When that happened many expected or even eagerly awaited the coming pullback. However, even though the price of bitcoin came perilously close to 30,000 USD and ETH and dropped below 1,000 USD, the fullback did not happen.

Instead, the market rallied within days and started pushing the price back up. Now, it seems that investors and traders are preparing for the next major price. Some are even assured that this would include a possible record-breaking price climb. As all of this takes place, there is growing concern that the same insane volatility, even for the crypto market, is drastically hurting not the BTC whales, but the smallest regular users. For the true believers in cryptocurrencies, the present situation is dire. For the same individuals and organizations, instead of providing the poor and geographically unfortunate individuals with a banking and financial system that anyone can employ, bitcoin is turning into a classical investor gambling den.

Volatility of Asset, not Money

Ever since bitcoin began working, its supporters usually tried to define a very finely tuned narrative related to it. Yes, bitcoin token BTC and the entire network offers a way of revolutionizing financial dealings in the age of the internet, esports, and many other modern tech phenomena. At the same time, this network also offered a chance for individuals to earn incredible amounts of money from speculation on its USD value. While no direct link with the traditional financial system ever existed, bitcoin like any other thing of value, always had a price in fiat currencies.

If an investor rode the same speculation in price and its volatility right, the chance of making a hefty profit was always there. That is why the entire concept of a digital currency quickly turned into the concept of an investment vehicle. The same concept began to grow in relevance and slowly put the whole digital currency that can actually be used in the back seat.

News Cycle

The news focus on the rising price in late 2020 and early 2021 is perfectly understandable. After all, the previous year was that of huge changes and disruptions. The coronavirus pandemics added to the same narrative immensely. More precisely this was the year that shows the entire planet saw just how much uncertain events and new but powerful systems can disrupt and transform everyday life. Because of this, many in the daily news media cycle quickly latched onto the story of the resurgent bitcoin.

Yes, the same did occur in 2017 when the previous bull run was underway, but the fact that this one happened along with the coronavirus pandemic made it that much more interesting to the global media outlets. Thanks to the same unwavering attention, many had to learn that bitcoin is overcoming one record after another, even though most of them neither understood nor possessed the same digital currency. The relentless news cycle and a media spotlight on bitcoin did not once again showcase the fact that BTC was a really useful and practical thing for many of those who are not large investors or day traders.

Use of Bitcoin

Bitcoin, as a centralized blockchain network, should be first and foremost a digital currency and not an investment vehicle. For many ordinary individuals in a range of countries across the world, it simply offers the financial and banking services that they would not otherwise have in their lives. Some places, like Cuba, struggle with political isolation and international problems. Other locations, like Hong Kong, are struggling with their domestic political circumstances. In all of these spots, the ability to use and hold BTC tokens or any other digital currency is by no means an act of financial investment.

It is a financial lifeline that allows them to get their money despite international sanctions or are the oppressive local government. The same individuals and their families purchase food, pay utility bills, and do many other everyday activities through the use of cryptocurrencies. Yet this is a narrative that will be really presented in mainstream media. Ordinary individuals in many different countries who simply use BTC as an everyday payment vehicle are practically non-existent in the news media cycle. So, inadvertently, the use of bitcoin in the eyes of the general public becomes that of an investment mechanism, not an actual currency that simply happens to so be non-governmental and completely decentralized.

Fighting Volatility

Anyone who is using bitcoin for practical purposes understands that the problem of volatility is also a problem of mass adoption. As long as the bitcoin token stays in a position where it can change its value drastically and practically overnight it is hard to imagine anyone starting to use it because they actually want to do the same and not because they have to. That is the conundrum of the global crypto community. On one side the same community needs and craves attention from the mass media and the general public.

On the other, that attention, in reality, will most likely bring actors who will not stabilize this cryptocurrency or any other. Because of that, the crypto community is getting the things that it wants and needs but also the things that are hampering the dreams of its creators, all at the same time. This is a tough position but at the same time, it is also not one where the same community cannot change any of those factors. Instead, right now, it can only ride the way of the attention and hope that the volatility and perception of an investment vehicle will not completely ruin its functional monetary potential.