This year we are able to see that cryptocurrencies tend to progress as well as down even by fifteen % of worth every day. Such changes of price are famous as a volatility. But what if… guarda and normal totally changes are among the features of the cryptocurrencies allowing you to create a very good earnings?
To begin with, the cryptocurrencies made it to the mainstream very recently, therefore all of the media about them and rumors are “hot”. After every statement of governing administration officials about possibly regulating or banning the cryptocurrency market we observe enormous price movements.
Secondly the nature of cryptocurrencies is much more as a “store of value” (like gold were definitely in the past) – most investors consider these as backup investment option to stocks, physical property like fiat and gold (traditional) currencies. The velocity of transfer has as well an impact upon volatility of the cryptocurrency. With the fastest ones, the transfer shoots even just couple of seconds (up to a minute), what makes them excellent advantage for short-term trading, if at this time there’s no good movement on some other sorts of property.
What everyone should take into account – that speed marches also due to the life expectancy trends on crypto currencies. While on regular markets trends may keep months or perhaps years – right here it happens within even days or hours.
This leads us to another point – although we’re speaking about a market place truly worth hundreds of billions of US dollars, it is still tiny amount in comparison with daily trading volume comparing to regular currency market or perhaps stocks. Therefore an individual investor making 100 million transaction on stock market won’t cause big cost change, but on scale of crypto currency market this is a noticeable and significant transaction.
As crypto currencies are digital assets, they’re susceptible to specialized as well as software updates of cryptocurrencies features or developing blockchain collaboration, which make it more appealing to the potential investors (like activation of SegWit mainly caused worth of Bitcoin to be doubled).
These factors coupled will be the reasons why we’re observing such massive price changes in price of cryptocurrencies within few hours, many days, weeks etc.
But responding to the question from the initial section – on the list of classic rules of trading is to buy cheap, sell high – therefore having brief but strong trends every day (instead of way weaker ones lasting months or weeks like on stocks) gives far more chances to help make a good profit in case used correctly.