Is Crypto Market Volatility For Bitcoin Investors A Net Positive For Traders?

Is Volatility In The Crypto Market Positive For Traders?

Volatility tends to be something positive for traders that are trying to maximize their trades and profits in a short period of time. However, there are other enthusiasts and experts that would like the market to be less volatile and become more stable.

Market Volatility Or Not?

Bitcoin (BTC) and many other digital assets have experienced high volatility in the last few years. In December 2017, the most popular digital asset was traded close to $20,000 but a year later it was reaching its lowest point in more than a year when it reached $3,200. There are many stories of miners or early adopters that had a few Bitcoins stored somewhere and they were able to sell their coins at $20,000 becoming millionaires.

Because of this price volatility experienced by the market, Bitcoin became popular and many individuals and investors entered the space. 2019, however, is completely different. Although speculation did not end, it got substantially reduced after a bear trend in 2018. People are starting to search for functionality and real-world use cases.

There are many digital currencies known as stablecoins that were created by both financial companies and crypto firms. JP Morgan Chase, for example, released a stablecoin known as JPM Coin and that it is expected to be used among partners of the bank in order to settle payments.

Stablecoins are digital currencies that are pegged to the value of another asset. It can be gold, another fiat currency or a basket of assets. The most popular stablecoin is Tether (USDT) that has a price of $1 USD and it fluctuates very little always close to $1.

The token created by JP Morgan will always be worth $1 and it is expected for users to be able to exchange it for USD when requested. Venezuela, for example, decided to create a stablecoin that was backed by the natural reserves of the country, including gold and oil. Many other firms are also searching for the way to issue a digital asset that is stable, which shows that there is a real potential in these solutions.

There were some rumors spreading in the ecosystem related to Facebook releasing a stablecoin that would be used by WhatsApp users in the remittances market in India. Although there is nothing confirmed about it, Facebook has been searching for experts in blockchain technology in order to be able to work in its blockchain-related products and services.

IBM has also decided to work in a payment solution called Blockchain World-Wire that will be offering cross-border payments to companies without having to depend on a third party company. This reduces costs and makes it easier for users to send and receive international payments. In order to offer these services, IBM is currently working with Stellar, which uses the Stronghold USD stablecoin as an intermediary currency rather than XLM, one of the largest digital currencies.

There are also smaller startups playing an important role in this competitive market. Gemini, one of the most popular exchanges in the market, has tried to release the first Bitcoin Exchange Traded Fund (ETF) to the market. However, the U.S. Securities and Exchange Commission (SEC) has been very clear about it and it will take a longer time for an ETF to be approved.