Greater Adoption For Less Bitcoin Volatility: Is It Possible?

Could greater adoption decrease the volatility for the number one cryptocurrency is the question that we are trying to find an answer to in the latest cryptocurrency news today.

One of the biggest problems of Bitcoin’s use case as a method of payment is the high volatility. Despite the huge market capitalization, it still remains a problem so can the greater adoption smooth the wild fluctuations in the price? The merchants that adopted the payment systems with Bitcoin are now encountering multiple issues due to the crypto’s high volatility, slow block validation and big fees for small payments. While there are some blockchain layers that can speedup Bitcoin’s transaction time and address the scalability challenges, there is still no system that can disregard the volatility. The latter is inherent to the price of Bitcoin and should be accepted as such.

When there was a massive adoption at all levels, the bitcoin price increased since everyone believed that the coin will become less volatile over time. We know that when the company stocks became less volatile, they grew from penny stocks to large caps or mega caps. The investors had similar expectations for the largest cryptocurrency but it still surprises the markets with the wild leaps. What is also very interesting, Bitcoin usually gets compared to large caps and Litecoin can be regarded as a small-cap in this context but both cryptocurrencies demonstrate high volatility levels.

The reason why Bitcoin remains volatile is that it represents the entire cryptocurrency market which is still emerging. The dominance of the number one cryptocurrency is currently at 70 percent and it is the highest since March 2017. It is only natural that Bitcoin will lead the entire market in one direction on another depending on the different fundamentals. However, the largest cryptocurrency became less volatile in the past few years and if we take a closer look at the Bitcoin volatility index, we can see that the oldest coin that is out there is used in much more volatile percentage terms until 2014. Bitcoin gradually became a more stable cryptocurrency in 2018 but the volatility index bounced back in 2019 during the bullish rally as reported in the altcoin news previously.