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Liquidity concentration risk is a major problem for variety of reasons, the currency needs to penetrate more into the world economy to increase diversification and the infrastructure of exchanges need to be more robust. Until risk concentration diversifies and exchanges increase in size, robustness and quality, Bitcoins will remain a high risk asset that can only be traded in relatively small volumes with high spreads and lag that makes leveraged trading unfeasible. In traditional Forex economic news events are the primary source of valuation volatility. The concentration of volatility around publication of key economic data acts as the drivers for trends on the market. Without the underlying financial fundamentals of fiat currencies, Bitcoin valuations are not driven by the same drivers which will require Bitcoin FX traders to develop new valuation methods in a very dynamic environment. As a result the number one concern for traditional investors is the unpredictable volatility which the above all contribute to to different degrees. But Traders love volatility, at least volatility that they can predict trends from.

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