An effect of news on Bitcoin price is a concern for many, but there are no hard and fast rules. In fact, the price action of Bitcoin has been largely unaffected by media reports. Nonetheless, any news can cause volatility in prices as investors try to assess the strength of their positions in the market.
For some time now, the news has been there for all to see. The recent introduction of Bitcoin futures from the Chicago Mercantile Exchange triggered a spike in the price of Bitcoin, causing many to speculate whether the futures market would be a good investment vehicle. In the same vein, the impending implementation of the BATS futures exchange made many question whether or not the pair would help the trend of momentum in the market. It may be too early to tell, but the speculation is there, making it a risk for new traders who are just getting into the trading scene.
However, any speculation as to the effect of news on price will only get you so far. For instance, if a company such as JP Morgan says that its CEO had a meeting with one of its investors, then the media may rush to report the news. Unfortunately, this effect of news on price is fleeting. The market takes time to digest the news and, unless the news is very newsworthy, it will fade away.
In addition, no one knows what exactly to make of the news in the currency market. After all, the price fluctuates, so it is virtually impossible to say what the effect of news on the price is. In most cases, it will have a direct effect on the local economy. If the news is bad for a country or an individual person, they may be hit hard in the market, causing them to sell their stock or currency and take a hit in their assets.
In the currency market, as in any other market, the larger and more powerful an entity, the bigger the impact the news can have. This is also true for the effect of news on Bitcoin price. For instance, if a company such as JP Morgan says that its CEO had a meeting with one of its investors, then the media may rush to report the news.
This has a direct effect on the market because each investor is also an investor of the dollar. If the news is bad for a country or an individual person, they may be hit hard in the market, causing them to sell their stock or currency and take a hit in their assets. In order to protect themselves, they might take out a second mortgage to purchase more of the currency.
It should be noted that while the Bitcoin price may be affected by the effects of news on price, they are still a relative price, rather than the actual trading price. An effect of news on the price is definitely a concern to many investors, and as previously stated, it will have a direct effect on the market. Unfortunately, it is a rare event where a market actually does react to news the way it should.
There are many factors that have to be considered when discussing the effect of news on price. Each investor has to decide which direction to go based on the news and that is the safest way to take. It is important to consider the news before investing because there is an effect of news on the price, but it is not the end all and be all of where everything in the market will end up.