Crypto Currencies Volatility, a profitable Rollercoaster
This year we are able to observe that cryptocurrencies tend to move up and down even by 15 % valuable each day. Such switches of price are recognized as a volatility. But what if… this’s totally normal and sudden changes are one of the qualities of the cryptocurrencies allowing you to create an effective profits?
To start with, the cryptocurrencies made it with the mainstream quite recently, therefore all of the news regarding them and rumors are “hot”. After every statement of federal officials about possibly regulating or banning the cryptocurrency market we observe huge price movements.
Secondly the character of cryptocurrencies is a lot more like a “store of value” (like gold had been in the past) – numerous investors consider these as backup investment option to stocks, physical assets like fiat as well as gold (traditional) currencies. The pace of transfer has as well an impact upon volatility of the cryptocurrency. With the fastest ones, the transfer shoots a lot just one or two seconds (up to a minute), what helps make them excellent asset for short-term trading, in case at this time there is no good trend on other types of property.
What everyone should remember – that speed moves as well for the lifetime trends on crypto currencies. While on Bitmain Antminers may appear to last weeks or even years – here it happens within even days or hours.
This leads us to another issue – although we are communicating about a sector truly worth hundreds of enormous amounts of US dollars, it is nonetheless very small amount in comparison with daily trading volume comparing to traditional currency market or stocks. Though on dimensions of crypto currency industry this is a noticeable and significant transaction, therefore an individual investor making 100 million transaction on stock market won’t cause huge cost change.
As crypto currencies are digital assets, they are subject to technical as well as software updates of cryptocurrencies features or expanding blockchain collaboration, which insure that it is more seductive to the prospective investors (like activation of SegWit basically caused worth of Bitcoin to be doubled).
These elements coupled are the reasons we’re paying attention to such massive price changes in cost of cryptocurrencies within few hours, days, weeks etc.
But responding to the question through the initial paragraph – on the list of traditional rules of trading is buying cheap, sell extremely high – therefore having brief but strong trends each morning (instead of way weaker ones lasting weeks or months like on stocks) offers a lot more chances to create a good profit if used properly.