Does number of traders affect volatility?
Does number of traders affect volatility?
The number of traders is increasing more than before as more people are generally becoming more interested in ways to become more financially independent and as thus in search of skills like trading.
Does the number of traders directly affect the volatility of the market? If it does, can we assume that trading was easier before with less traders (less volatility) than now when there are more traders, and the market more volatile?
Obviously more traders will affect volatility. This is because if there are more traders there more people who are willing to buy and sell bitcoin. Thus affecting the price of bitcoin everyday. In other terms, the demand and supply will increase significantly which will know that this is the reason for volatility.
Theoretically and generally, yes it does affect volatility. But the factors affecting volatility are definitely more than just # of traders, namely — liquidity, trading volume, etc. It’s all those factors altogether. So no, we can’t make an accurate assumption based on a single metric.
Yes the volume of open trades this days signifies that there are many traders coming into the market and as you said increases volatility but that doesn’t mean it was less easier than before, one thing I think traders like most is that high volatility and the traders now are enjoying the benefits not to talk of numerous strategies or indicators or fundamentals used to get accurate information on trades this days which to me makes it easier than in the past.
People trade bitcoin than shit coins but why bitcoin is less volatile than shit coins? More people trade gold but gold is less volatile than bitcoin? More traders does not mean but the marketcap is what that is very important. The lower the marketcap of a coin, the higher the volatility. Not about the higher the number of traders.