Bitcoin is widely accepted as a safe haven, and two factors ensure the stability of the currency price

In a practical scheme of things, it will be difficult for Bitcoin to gain a dominant position in the financial markets if its price continues to be unstable.

Since the recovery of bitcoin prices in late 2013, which brought cryptocurrencies to new heights, digital currencies have entered a relatively quiet period. According to information from the CoinDesk BPI exchange, in January 2013, the price of bitcoin fell to a two-year low of $214, a drop of about 71.14% from its peak.

However, since hitting a two-year low in January, Bitcoin has risen 191% to $623.24. This huge price fluctuation shows that Bitcoin is volatile. Wall Street analysts consider stocks to be the riskiest asset class, but we have always believed that Bitcoin is riskier than stocks.

In a practical scheme of things, it will be hard for Bitcoin to gain a dominant position in the financial markets if its price continues to be volatile. During the Great Depression, the “most volatile” stocks didn’t even show much volatility, but Bitcoin did. For example, on November 27, 2007, market analysis company Ycharts’ S&P 500 fell 50% to its lowest point due to the recession.

To that end, here are some things that could make the price of Bitcoin more stable.

Bitcoin becomes the underlying asset for certain financial instruments

If Bitcoin is not only a digital currency but also an investment product, then the price of Bitcoin must be stable. Therefore, in addition to being a digital currency, Bitcoin needs to make investors interested in it in order to stabilize its price. If there is no other problem, it will provide a large demand for trade volume stability, which will end the instability of Bitcoin prices.

However, with the numerous high-profile Bitcoin hacks and thefts, it has become difficult for people interested in long-term investment to put their money into Bitcoin. However, with the much-anticipated advent of Bitcoin exchange-traded funds (ETFs), it will make long-term investment easier to a certain extent, as investors only need to invest in funds that track Bitcoin's trading performance, and they will not be at risk of theft.

As an added benefit, if Bitcoin becomes the underlying asset for ETFs or other financial instruments, this will boost the security level of Bitcoin because as more wealthy people in the world take a stance in support of Bitcoin, more efforts will be made to ensure the security of the cryptocurrency.

Once Bitcoin becomes more secure, more financial products will be linked to Bitcoin, making the price of Bitcoin more stable. Bitcoin transactions will also become complicated, and you will see incredible processes for buying Bitcoin - getting personal loans for Bitcoin, and then using personal loans to improve credit ratings.

Bitcoin is widely accepted as a safe haven

Gold trade is so thriving because it is attractive as an investment. A large part of its appeal comes from its perceived “safe haven” status as an asset class. It makes sense for Bitcoin to be considered a commodity.

First, Bitcoin needs to become an underlying asset for investment tools such as ETFs, and then achieve much-needed price stability. If this is achieved, then the next 10 years will be like the decade of gold for Bitcoin. On the one hand, gold has performed better than stocks in the past 15 years. On the other hand, analysts predict that stocks and bonds will perform much worse than before in the next 20 years.