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Volatility usually is considered bad. Why would you want to invest in something whose day to day price can change 20%? For day-traders and HFT volatility is g
by bb88 10y ago
Volatility usually is considered bad. Why would you want to invest in something whose day to day price can change 20%? For day-traders and HFT volatility is good, since they can (as you have said) ride the swings.
There's the value of a bitcoin, and the value that bitcoin brings to the market. And those are two different things.
The value bitcoin brings is anonymous currency transactions and anonymous speculation.
Now ask yourself what is the value of one bitcoin? It's not based on a physical scarce resource like coal or oil. It's not based upon an actual currency either (either gold backed or fiat). In fact the only value people have in it is that other people invest in it. So speculation has created value.
Volatility in this case is just a side effect of speculation.
- logicchains 10y agoIn some cases volatility is categorically good, e.g. if you have a put option that's in the money. Volatility increases the chance of it either going far into the money (so you profit) or far out of the money (in which case you can just choose not to exercise the option): it increases potential reward without increasing potential loss (you'll never lose more than the premium you paid for the option).