Volatility and the case of Dogecoin
Updated: May 10, 2021
This post contains affiliated links. Learn more in our Affiliate Program page.
Why are cryptocurrencies so volatile? Here are some reasons:
Speculation: crypto are subject to speculative trading. Buyers purchase cryptocurrency with the hope of profiting in a short time. This means, they buy large amounts --making the price go up-- to then quickly sell --making the price go down.
Media coverage: the impact of media coverage in the public, leads to buy the best known coins, to sell if there is bad press, and to follow the moves of influential personalities. Added to speculation, it contributes another factor for volatility.
Whales: this is the term for people/institutions that hold a large (really large!) amount of cryptocurrency. If just one of these whales sells a high fraction of the crypto they possess, it creates waves that impact the price of the coin.
Sentiment: And here we arrive at the case of Dogecoin (DOGE)