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What makes crypto volatile?

The following information is for educational purposes only and does not constitute an endorsement of this type of Cryptocurrency. Consider seeking tax and financial advice from licensed professionals. The cryptocurrency service is currently available to PayPal Personal account holders only.

Visit Discover Crypto for more information.

Crypto is considered volatile because of how much and how quickly its value can change unexpectedly. That means you can lose money just as easily as you can make it. Here are some factors that may help to explain why crypto is volatile.

Visit Discover Crypto for more information.

It's still pretty new
The best indicator of the future is the past, but for crypto, there isn't much historical past to look at and give us an idea of how stable things will or won't be in the future. So, from updated tech to hard forks, to one day the final Bitcoin getting mined, volatility is created as the market reacts to each new development in the crypto world.

Innovation is a big factor
Every day, people around the world are developing new cryptos and apps to advance technology. Some ideas are full of potential, some ideas don't pan out. And because innovations affect the rate of adoption, each success and failure can have a strong impact on the entire crypto market.

The rate of adoption is low
The reality is you can't spend crypto just anywhere, at least not yet. The next big leap for crypto could occur once it's widely accepted by merchants. If anyone crypto reaches the point of stable and universal adoption, many believe that market prices will also stabilize.

There's no central authority

Traditional currencies have authorities like central banks that can intervene in the market to help stabilize them. Crypto, on the other hand, has no such authority and tends to have larger, more sudden swings in value with no chance of being stabilized by a central authority.

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