Why is the fair market price of some cryptocurrencies more volatile than others?

3 answers

• Jon Doi ImicoinAug 27, 2025 · 13 days ago
  The volatility of cryptocurrencies can be influenced by several factors. One major factor is the market demand and supply dynamics. Cryptocurrencies with a smaller market cap and lower trading volume tend to be more volatile because even small buy or sell orders can have a significant impact on their price. Additionally, the lack of regulation and oversight in the cryptocurrency market can contribute to increased volatility. News and events, such as regulatory announcements or security breaches, can also cause sudden price fluctuations. Overall, the volatility of cryptocurrencies is a result of various factors interacting in a complex and dynamic market.
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• Neel AndholeJan 31, 2022 · 4 years ago
  The fair market price of some cryptocurrencies is more volatile than others due to the speculative nature of the market. Cryptocurrencies are still relatively new and their value is primarily driven by investor sentiment and speculation. This speculative behavior leads to higher price volatility as investors react to news, market trends, and other factors. Moreover, the lack of intrinsic value and the absence of a central authority regulating the market make cryptocurrencies more susceptible to price manipulation and sudden price swings. As a result, some cryptocurrencies experience higher volatility compared to others.
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• AndreiAug 01, 2021 · 4 years ago
  From my experience at BYDFi, one reason why the fair market price of some cryptocurrencies is more volatile than others is the difference in liquidity. Cryptocurrencies with lower liquidity, meaning fewer buyers and sellers in the market, tend to have higher price volatility. This is because even a small order can have a significant impact on the price due to the limited number of participants. On the other hand, cryptocurrencies with higher liquidity are less prone to extreme price fluctuations as there are more participants to absorb buying or selling pressure. Therefore, it's important to consider liquidity when assessing the volatility of cryptocurrencies.
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