Bitcoin volatility and other commodity price stability

Bitcoin volatility is one of the most common arguments against cryptocurrency, but the stability of commodity prices is a myth. The assumption that Bitcoin prices are not yet ready for public use due to price volatility is therefore a weak criticism based on the false assumption that price stability is somehow a sign of an accepted, accepted commodity. In reality, market-based prices are constantly moving. This means that the price of Bitcoin will always be unstable and it is time to accept this and move on to solving actual cryptocurrency problems instead of chasing myths.

The myth of raw material price stability

Trading in commodities is an established and highly regulated practice. Commodities that are traded in open markets are based on industries with millions of professionals spread around the world. Farmers, shippers, manufacturers, distributors, consumers and even governments want stable prices for the goods they produce or consume, and yet these prices remain highly unstable. For example, the price data of the last five years for three of the most respected commodities shows that price fluctuations in the commodity markets are not alarming, but simply normal.


In the US, corn sales are around $ 40 billion annually. According to Scientific American magazine, “No other American crop can match the size of corn.” Corn is used in animal feed, biofuels, and as an ingredient in many consumer products. Corn isn’t new. The Encyclopedia Britannica states that corn was probably first grown by farmers in Mexico over 10,000 years ago. Corn has a long history and big business, but is the price stable? No. The price of corn has hit a high of $ 520 per bushel in 2014 and a low of $ 300 per bushel in 2016 over the past 5 years. A 42% decline over a two-year period is not a stable market.


A little-known fact is that almost all wars ever fought have been disputes over resources. It is better known that wars are waged today that are closely linked to access to oil. According to the Harvard Kennedy School, “Oil is a leading cause of war: between a quarter and a half of interstate wars since 1973 have been related to oil.” This is because both modern machinery and plastics are dependent on oil consumption. Oil is to modern society just like water is to the human body. Before oil, most wars were over access to food and water. Unfortunately, people have moved on to arguing for other goods. Even so, kingdoms are created, armies set up, and cities built on the sale of oil. According to the BBC, the modern oil industry wasn’t born until 185. However, history reports as early as 3,000 BC. From the Babylonians about the first uses of oil. We have a highly regulated market again that sets the price for a commodity. This commodity has been used for thousands of years. Wars were justified by price movements in this commodity, but is the price stable? No. The oil price has hit a high of $ 106 per barrel (2014) and a low of $ 26 per barrel (2016) over the past 5 years. Prices that have fallen 75% in a couple of years are not a stable market.


Gold doesn’t need an introduction. Throughout human history, gold has been one of the most common forms of money as it is a small symbol that represents wealth that can be transferred from hand to hand, from pocket to pocket. Bitcoin is often referred to as “digital gold” because, like gold, it can be traded from pocket to pocket without the assistance of government agencies. However, with Bitcoin, this is happening online for the first time. The gold market may be the oldest and most regulated market in the world, but is it stable? No. In particular, the price per ounce of gold over the past 5 years hit a high of $ 1,390 (2014) and a low of $ 1,045 (2015), followed by a bull run back to $ 1,375 and then back down over the next six months in the following six months to USD 1,100. Down 25%, plus 32%, minus 20%, gold is not a stable market.

Corn, oil, and gold all have well-established intrinsic value, all have highly regulated markets, and all have centuries of global trading history. However, they are all traded in very volatile markets that have gone up or down as much as 75% in the last five years alone.

Why Bitcoin Prices Remain Unstable

As mentioned above, market-based pricing means price instability. This is how market-based pricing works. It is more worthwhile than longing for the day bitcoin prices are stable to try to understand the market forces that drive bitcoin price instability. There are two main drivers of market-based prices: supply and demand.

demand: Assuming that the Bitcoin supply should remain constant, the higher the acceptance, the higher the demand, which drives up the prices. However, the bitcoin supply is not constant. Bitcoin will be mined and more Bitcoin will be released every 10 minutes. Bitcoin, however, still works on a kind of deflation model as the amount of new coins that go into circulation decreases over time.

Deliver: Assuming that market demand remains constant over the years, demand will likely exceed supply and the Bitcoin price would then increase. Bitcoin demand is not constant, however. Bitcoin adoption has increased over the years. I have estimated cryptocurrency adoption rates to be less than 2% of those in the world who can own bitcoin, so I think adoption rates will most likely continue to rise.

Combined, the market forces influencing supply and demand point to further price gains for Bitcoin in the years to come. Although cartels are trying to impose deflationary models on corn, oil, and gold, they lack the guaranteed constant deflationary forces in Bitcoin. The rise in the prices of corn, oil and gold is most likely due to the world’s population growth and economic expansion, both of which are increasing demand. The good news for Bitcoin is that it also has the benefit of increased adoption of population growth and economic expansion, but also ensures unchanging deflation.

Bitcoin prices increase over time

Yes, the price of Bitcoin is moving, but using that fact as a criticism assumes the possible existence of a myth: the price of Bitcoin deserves to be stable and will one day be stable. Rather, a review of the market forces that drive commodity and bitcoin prices predicts that bitcoin price will not become stable but will continue to rise over the years. The next time someone tells you that Bitcoin is too unstable, please point out that oil, gold and corn will outlast us all and these markets are very unstable, or better yet, just send them this article.

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Selected image: DepositPhotos / mkarco

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