Bitcoin still faces many challenges before becoming a popular store of value due to high volatility and geopolitical risks.
In the context of strong volatility and pressure from external factors, Bitcoin needs time to stabilize trading and build long-term trust within the global investment community and users.
MAIN CONTENT
Bitcoin has not developed enough stability to be widely accepted as a store of value.
High volatility remains a significant risk, affecting Bitcoin's position in the eyes of investors.
Other risks include legal instability and market changes due to Bitcoin whales or geopolitical volatility.
What obstacles does Bitcoin need to overcome for wider acceptance?
Expert Matt Britzman at Hargreaves Lansdown emphasizes that Bitcoin is still in a not fully stable phase and faces many risks before being considered a leading store of value.
Price volatility remains a core factor limiting the widespread use of Bitcoin in transactions and long-term investments. Significant price fluctuations not only affect retail investors but also make financial institutions hesitant to engage. Additionally, ongoing geopolitical tensions can also exert pressure on the cryptocurrency market, increasing uncertainty.
How does price volatility affect Bitcoin's position?
Data and analysis show that high volatility limits Bitcoin's ability to be used as a reliable store of value, especially in traditional financial markets.
A real story that many experts warn about is that Bitcoin's price can fluctuate suddenly due to large transactions by Bitcoin whales, who are investors holding vast amounts of Bitcoin. This creates liquidity risks and makes it difficult for investors to predict market trends, affecting investment decisions and the use of Bitcoin as a stable financial tool.
Bitcoin still needs time to become a true 'digital gold'. Instability and regulatory pressure are significant challenges that the market must overcome in the near future.
Matt Britzman, Analyst at Hargreaves Lansdown, 15/07/2024
How can legal risks and Bitcoin whale actions affect the market?
According to financial experts, the unclear regulatory environment surrounding cryptocurrencies poses many challenges for Bitcoin regarding regulations and official acceptance in many countries.
Furthermore, Bitcoin whales have the potential to create significant volatility in the market when selling large amounts of assets, posing a serious pump and dump risk affecting prices. Legal instability and whale actions increase systemic risks, forcing investors to carefully assess before entering the market.
Comparative risk impact of price volatility and legal factors on Bitcoin
Factors Impacting Bitcoin Affecting Investors Price Volatility Causes severe fluctuations, making short-term trends difficult to predict Extends payback periods, increasing investment risks Legal Risks Unclear, may tighten regulations Causes concerns and limits expanded use Whale Actions Significant impact through large volume transactions The market may be manipulated, causing instability
How do geopolitical factors affect the Bitcoin market?
The report shows that global conflicts and political instability can increase pressure on the cryptocurrency market, causing capital flows to fluctuate and creating instability.
The connection between cryptocurrencies and external factors such as the economy and politics exposes Bitcoin to risks of fluctuations not aligned with investor expectations. In fact, the volatility during periods of geopolitical tension has previously affected market sentiment, increasing Bitcoin's volatility.
The cryptocurrency market will respond sensitively to global political issues, especially as investors seek safety or flee from risky assets.
Jinshi Research, Cryptocurrency Market Analysis Report, 2024
Frequently Asked Questions
Can Bitcoin become a stable store of value in the future? With improvements in liquidity and more stable trading, Bitcoin is gradually moving towards this role but still needs time to establish itself. Why is price volatility a significant risk for Bitcoin? High price volatility makes it difficult for Bitcoin to be used as a reliable store of value and complicates market predictions. How do Bitcoin whales affect the market? Large transactions from whales can cause sudden price changes, leading to severe volatility or market manipulation. How do current legal factors impact Bitcoin? Uncertainty and inconsistency in regulations may cause Bitcoin to face barriers to development and expanded use. How do geopolitical factors affect Bitcoin's price? Political instability increases market risks, affecting sentiment and investment flows into Bitcoin.
Source: https://tintucbitcoin.com/bitcoin-doi-mat-nhieu-thach-thuc-lon/
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