This year we can observe that Cryptocurrency tends to move up and down even by 15% of the value every day. Such price changes are known as volatility. But what if … this is truly normal and suddenly change is one of the characteristics of the cryptocurrency that allows you to get good profits?
First of all, Cryptocurrency managed to reach the mainstream recently, therefore all the news about them and “hot” rumors. After each statement of government officials about the possibility of regulating or banning the Cryptocurrency market, we observe a large price movement.
Both of the cryptocurrency properties are more like “shop value” (such as gold has been in the past) – Many investors consider this as a backup investment option for stocks, physical assets such as the gold and fiat currency (traditional). Transfer speed has an influence on Cryptocurrency volatility. With the fastest, transfers even need a few seconds (up to one minute), what makes them very good assets for short-term trade, if there are currently no good trends on other types of assets.
What everyone must remember – that the speed runs also for age trends in Crypto’s currency. While regular market trends may be in the last months or even years – here occur within a few days or hours.
It led us to the next point – even though we talked about the market which was worth hundreds of billions of dollars, it was still very small compared to the volume of daily trading compared to the market or traditional currency shares. Therefore one investor that produces 100 million transactions on the stock market will not cause a large price change, but on the scale of the Crypto currency market this is a significant and real transaction.
As crypto currencies are digital assets, they are subject to technical updates and the Cryptocurrency feature software or expanding Blockchain collaboration, which makes it more attractive to potential investors (such as Segwit activation basically causes a Bitcoin value duplicated).
These elements are combined are the reasons why we observe very large price changes in the price of cryptocurrency in a few hours, days, weeks etc.
But answering questions from the first paragraph – one of the classical trading rules is buying cheap, selling high – because it has a short but strong trend every day (instead of weaker ones that take weeks or months as in stocks) provide more opportunities for Generate decent profit if used correctly.