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Message: <blockquote data-quote="Jacob Miller" data-source="post: 65020" data-attributes="member: 5063">This volatility, in my opinion, is highly representative of the current liquidity in that market and its rapid expansion with more and more liquidity from different sources coming into play over the last few years (and 8 weeks in particular). It's also a borderline-unregulated market subject to significant manipulation and movement. Another minor reason for the drop in BTC specifically is that the market has piled liquidity into a variety of crypto assets as discussed and there is only so much liquidity to go round. I personally feel that there is a reasonable likelihood of a further drop in BTC market cap with the market cap of other crypto assets increasing; when that drop in market cap and value occurs, we will see institutions invest en mass into BTC at a better price, which will both drive the value of BTC into the stratosphere and also begin to stabilise the market as discussed below. That is also the point at which I think we will see a bifurcation of the crypto market, with institutions 'deciding' what assets have longevity potential and what ones don't. Any asset is more vulnerable to vast fluctuation when its market is constantly changing in liquidity level and when there isn't a huge amount of liquidity in the market. This is because, when there is less overall liquidity, then every point of change in liquidity has a more marked effect. To contextualise this, the daily volume of BTC traded equates to something like $65bn; the currency market sees a $6.6trn daily traded volume. If you look at a currency pair like EUR/USD (Euro vs US Dollar), you'll see that it stays relatively consistent in price over the long term: in the last five years, EURUSD hasn't traded outside of a range between 1.035 at the lowest and 1.256 at the highest - that represents just a 21% range of movement. This is because EURUSD is the most liquid currency pair on the market, with arguably the highest daily traded volume. The effect of this is that the price stays relatively consistent because each change in liquidity and direction only has a very very limited effect on the market as a whole.Tl;dr: volatility will calm as liquidity in market increases with uptake.** the massive caveat on everything above is that I'm far from a crypto specialist, it's not an asset class that I personally take much to do with on a daily basis!</blockquote>

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