Thu. May 26th, 2022

We can see that Cryptovoyage have a tendency to fluctuate by as much as 15% per day this year. These price changes are called volatility. What if this is normal? Cryptocurrencies allow you to make good profits by allowing for sudden price changes.

First, cryptocurrencies have only recently made it into mainstream, so all news and rumors about them are hot. We see huge price movements after each government statement about possible regulation or ban on the cryptocurrency market.

Second, cryptocurrencies are more like a “store-of-value” than gold in the past. Many investors view them as a backup investment option to stocks and physical assets such as gold or fiat currencies. Volatility of cryptocurrency can also be affected by the speed at which it is transferred. The fastest transfers take less than a minute, which makes them a great asset for trading short term, even if there isn’t a good trend in other assets.

Everyone should remember that crypto currencies are fast and can last for a long time. On regular markets, trends can last months or years. Here it happens in days or hours.

We now come to the next point. Although we are talking about a market that is worth hundreds of trillions of dollars, it still pales in comparison to daily trading volume when compared to stocks or traditional currency markets. A single investor making 100,000,000 transactions on the stock market won’t cause a huge price change. However, this transaction is significant on the scale of crypto currency markets.

Crypto currencies can be considered digital assets and are subject to software updates that improve the cryptocurrencies features or expand blockchain collaboration. This makes it more appealing to potential investors. SegWit activation, for example, has basically doubled the value of Bitcoin.

These are all factors that are responsible for the rapid price fluctuations in cryptocurrency prices within a matter of hours, days or weeks.

Answering the question in the first paragraph is a classic rule of trading. Buy cheap and sell high. Therefore, having strong but short trends (instead of long-lasting ones like stocks), gives you more chance to make decent profits if you use them properly.

By henna

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