The Bitcoin market is maturing. This is shown by the relative stability noticed in recent times which could be as a result of certain factors that have come into play especially within the past year.

Prior to this year, Bitcoin was subject to volatile swings in its value. While the risk is still there, it appears that only major fundamental events are triggering the same kinds of movements which were commonplace just a few years ago.

Cointelegraph asked experts what could be the reason for the relative stability being experienced within the Bitcoin market and what this implies for the cryptocurrency.

Bitcoin is maturing

Jason Cassidy of Emercoin says the prevailing pattern shows that the Bitcoin market is maturing.

Cassidy says:

“Indeed, the Bitcoin market is maturing which over time will usher in waves of stability. I expect these to increase over time as volatility decreases.”

He continues by saying that as the cryptocurrency grows in popularity and utility it will begin to function more like a currency. People holding Bitcoin will find it more of a store of value which is part of the growing pains being experienced by Bitcoiners.

“In the future the bubbles should decrease in scope (smaller % increases, law of large numbers coming into play). Still, there is a tremendous amount of upside left towards the journey to mainstream acceptance,” concludes Cassidy.

Speculators have moved to Ethereum

Alena Vranova of SatoshiLabs identifies a few factors which could be responsible for the relative stability, which includes the creation of Ethereum.

Vranova says:

“I'd assume that a portion of investors and speculators moved their portfolio to Ethereum. Also the Bitcoin market is on its way to becoming more mature, and there's less panic with sudden swings.”

More liquidity, less crooks, increased ability to hedge

According to David Mondrus, three major factors are responsible for the recent behaviour of the Bitcoin market and in a particular order: more liquidity, more players, less crooks.

Fran Strajnar, co-Founder at BravenewCoin, also acknowledges increased liquidity as one of the factors that have determined the current mood of the Bitcoin market. However, he adds that more financial instruments have helped stabilize the price and also that there is a growing number of ways to hedge Bitcoin now.

Chris Pacia, Lead Backend Developer at OpenBazaar, says:

“I think that it's a combination of a couple things. Bitcoin has been growing more liquid as new markets for buying and selling Bitcoin come online. Typically increased liquidity makes assets less volatile, all other things being equal. Also, I think the technology has been proving itself to be remarkably stable which eliminates some of the perceived risks.”

A natural curve

Kumar Gaurav, co-Founder and CEO of Cashaa, sees the initial behaviour of the Bitcoin market prior to recent times as a natural phenomenon.

Gaurav says that it is common with any new product or service in the market when it has limited users, hence it becomes very easy to see the effect of market because it's just driven by the demand which is relatively very small. He says that the same goes for Bitcoin before this year as it was the only major cryptocurrency and investors/ traders who were moved by any big or small events. While this year various launches and positive news about Blockchain has helped a lot in stabilizing the value of Bitcoin.

Here are the main reasons for this relative stability identified by Gaurav.

1. Awareness and tech education

Gaurav says that more and more people are aware of the crypto currency and when it comes to choosing, as humans we believe in “old is gold”. He also says that users are now able to understand the difference between Bitcoin, exchange, Blockchain and other technical differences. And now know that hacking of an exchange or bug in any system is not particularly related to Bitcoin.

2. Positive news related to Blockchain

Gaurav points out that this year marks the arrival of several big companies from IBM, Microsoft, Bank of America and government organizations across the globe where every entity started showing active interest and contribution to the Blockchain. However, most of them are just because of peer pressure and creating a lot of hype. But this has helped to build a positive environment around acceptance of cryptocurrency, and Bitcoin came out as the superhero due to all this.

3. Increased institutional and small investment

Gaurav continues by saying that the above two are the main two factors which helped in investment in Bitcoin and as such, due to higher demand lead to an increase in price. Now this big pool of a market is working as a shock absorber for Bitcoin.

4. Blockchain and Bitcoin Startups

He concludes by saying that startups like Abra, Bitpesa and Cashaa are using the potential of Bitcoin to deliver services which are then being used by the average consumer and improving liquidity of the market. Also, startup ideas which are solving real world problems by using Bitcoin or Blockchain are one of the major stability reasons, and investors are embracing these efforts and fueling this process by investment, thus building a complete ecosystem around Bitcoin.