Investment means uncertainty; hence there are risk factors associated. e. But if there is more risk there are chances to make more profit out of investment. This drives investors’ minds to invest in stocks as well as Bitcoin. If you are planning to trade bitcoin, use bitcoin up to efficiently trade Bitcoins.
The Bitcoin market is considered to be the most volatile market today. Well, as a new investment asset this is not a very uncommon thing. The volatility of Bitcoin attracts many investors who enjoy playing in dangerous fields and grabbing profit from it, whereas some investors stick to the traditional stock market. So, the question arrives which is better to invest in as long as volatility and risk are concerned.
- Volatility and risk associated with stocks:
The high volatility of Bitcoin has made such a scenario and sensation that the risks associated with the traditional stock market got hidden behind it. There is no denying that the Bitcoin market is volatile but the stock market is also volatile. Not only the company’s performance but also government taxes and inflation cause volatility in a stock market.
- Company’s performance: When you buy a share of a company you have ownership of that percentage of the company as a shareholder. So, if the company gains profit it will give you the percentage and if it loses that percentage of loss is also yours.
- Dividend: Companies sometimes give dividends to the investors if the shares are liquidated. But, companies in many cases go through liquidity problems hence there is a chance of not giving the dividends to their investors. It also can affect the stock prices.
- Stock demands in the market: Company’s stock prices depend on its demand and supply in the market. Many new companies are there that got permission from SEBI to issue stocks in the market but fail to make a demand.
- Inflation: During inflation, this is obvious that rates of commodities increase. So, manufacturing rates increases and the companies face problems to sell their product to the customers at a high rate. This impacts company’s profit and so on share rates.
Government taxes: Government keeps changing its tax percentages. This way tax lied on your profit can be changed and the amount of profit can be more or less.
- Government regulation: Some industries like pharmaceutical, telecommunication, tobacco, etc. run as per governments regulations. So, changes in government rules can affect the shares these companies issue. Hence the risk is arriving there too.
- Volatility and risk associated with Bitcoin:
There is no doubt that Bitcoin is volatile. From 2009 to 2022, not a big-time but its price graph looks like a dangerous rollercoaster. The volatility and risk of bitcoin depend on a few things.
- Supply and demand: This is the main reason for its volatility. Bitcoin supply is not regulated, unlike stocks. It is mainly determined by the mining process, chances to solve mining calculations, and the time it takes. So, no one can predict it or control it. Whenever there is a new Bitcoin in regulation price downs and vis-versa.
- People’s emotion: Yes, for Bitcoin it works like this, the way Bitcoin came into existence at a time when people lose their trust in the traditional banking system, drags people’s attention to it. Not only that, the hope and convenience they get from Bitcoin that they will only have the control of their money and no third party can regulate it, a large number of people accept it gladly. But, speculators are always there. And as a new asset or currency, it has to prove its worthiness to the world. These factors keep Bitcoin’srate dragging ups and downs.
To be concluded, both stocks and Bitcoin are volatile. If we talk about a single company, the volatility depends on its own performance and the other factors on top of that. So, a single company can be very volatile. But, when it comes to the whole stock market, it is comparatively less volatile than Bitcoin. A little bit same is applied when you see the total cryptocurrency market. That’s why investors suggest not only investing in Bitcoin rather diversify the portfolio and investing in some other cryptocurrencies as well. However, as the crypto market is new you must choose your investment platform wisely.
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