Why is Crypto Currency So Volatile?
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Axel Falconi
College:
College of Business and Public Management
Major:
Accounting
Faculty Research Advisor(s):
Yu, Huaibing
Abstract:
Ultimately, supply and demand has determined the price for goods and services for centuries. Key factors that determine the value of goods could also be applied to crypto currency. Interestingly the price of crypto currency as an asset has always been volatile since its inception in 2009. For instance, Bitcoin had peaked at a price of $65,000 just to decline to $18,000 sixteen months later! Bitcoin lost $47,000 or 72.31% of its value in a couple months. However, these fluctuations pale in comparison to other currencies who fluctuate thousands of times greater than Bitcoin. Some people believe that crypto is a fad that will eventually be worthless, similar to other intangible assets that use blockchain technology such as NFTs. Simultaneously there are countries such as El Salvador that are using the technology to process all transactions in the country. Thus making Bitcoin the first intangible form of national currency in human history. I will try to address the factors behind crypto’s volatility, and estimate where crypto’s future is headed.