The massive fall in dollar price was initiated by Elon Musk several days ago complaining about bitcoin being bad for the environment (and yes this is the same Elon Musk that apparently has no CO2 qualms when it comes to blowing up massive rockets full of fuel on their launch pads) followed by a false rumor that China has just banned their finance institutions from using crypto (the truth is they made that ban years ago and no new bans have been instituted).

But another stated reason for the fall was people having leveraged crypto positions open. One reporter claims that hundreds of thousands of people had leveraged crypto positions liquidated as the price dropped, and that forced the price lower. Very much like a reverse short squeeze, or maybe there's a proper term for it. The claim is that some of these losing parties placed new leveraged positions again only to see them liquidated as well.

This was pretty unprecedented, even for crypto, which says a lot. Crypto is way too volatile for anyone to have any business leveraging it. And in fact Bitcoin itself survived that far better than about all other cryptos, which uniformly fell about 2x as much, more or less.

And in fact Bitcoin itself survived that far better than about all other cryptos, which uniformly fell about 2x as much, more or less.

There are several digital currencies. I wonder if there is a volatility index like they use for the stock market?

This article might help explain. ;)

Why Bitcoin Has a Volatile Value

That might be overanalyzing.

I think crypto is volatile because there is no leveraging of crypto positions, for the most part. In foreign currency exchange, there's far, far less volatility because in part leveraged positions mean people and institutions can make huge amounts of money on tiny moves. So instead of waiting for the price to go up 10% to exit, they instead exit when prices rise about 0.3%. Those frequent entries and exits help keep overall prices stable (and also makes moves far harder to predict, which means 95% of retail forex trades lose money and makes forex far more risky than crypto, IMO).

Crypto is also not tied to a tangible product like soybeans, sugar or corn, which has a real world use which controls prices. It's much harder to place a firm utility value on a crypto as they are potential currencies themselves, so how much is a currency worth? Currencies do have value to an economy as an economy NEEDS them to operate with anything close to any efficiency (bartering is very inefficient, so currencies make trading much more efficient and therefore save people time and energy, therefore provided value to a society).

I'm beginning to see volatility as a sign of an honest market which institutionalized finance does not bring us with their leveraged position offerings, inherently fraudulent short selling (does not exist in crypto, at least yet) and the like. As crypto volatility reduces over time, so will the ability for small people to make money with it.

That might be overanalyzing.

I do not know much about Crypto. But I do know a young lady who dabbles in it and has made some money doing it. ;)