What According To MicroStrategy CEO, The Reasons Behind Volatility In Crypto Market? 

• In the latest CNBC interview, Microstrategy founder Michael Saylor discusses the reason behind the large fluctuations in the price of the crypto assets. 

• Wild-west of crypto derivatives and 20X leverage on the off-shore exchange are among the two reasons behind the volatility in the crypto market that Michael points out in the interview. 

• The Microstrategy CEO believes the implementation of the regulation is the solution. But, the investors should be ready to face some volatility initially. Eventually, he says, it would stabilize the prices of cryptocurrencies.

Michael Saylor, the founder and CEO of Microstrategy, points out the factors, which according to him, are the reason behind the fluctuation in the prices of crypto assets. 

In the latest interview, Bitcoin(BTC) points out the lack of clear regulations. He explains that since cryptocurrencies are largely unregulated, the investors trade in ways that are usually not permitted while dealing with stocks and other traditional assets. 

The asset class is still immature and drives the volatility. The wash trading rules such as buying and selling at the same hour are not there, which Michael believes is quite unfair. 

Michael also lists various factors affecting the volatility in the crypto market, including 20X leverage on the off-shore exchange, Wild-west of crypto derivatives, and ”cross-collateralization of altcoins into ETH [or] BTC through decentralized finance (DeFi) exchanges on a Saturday night through a fragile piece of liquidity on the 177th-biggest coin”.

The MicroStrategy CEO also acknowledges that in the initial days of implementation, there will be uncertainty which, in turn, can cause more volatility at first. However, it will eventually bring the price stability of cryptocurrencies. It will increase the interest of blue-chip investors, and they will start supporting digital assets. 

He explains that as the regulations are implemented, they will affect all the different systems in the crypto world since they are all related to each other. He says it would be surprising for him if there wouldn’t be any volatility. Just like many other things, there are pros and cons attached to it. “It comes with a territory”, he adds. 

However, he believes the volatility will be decreased as the regulation starts setting in, encouraging more institutions to adopt cryptocurrencies.