This year it is seen that the cryptocurrencies is moving up and down by 15% of the value on daily basis. These changes in the price are called volatility. What if… it is normal and any sudden changes are some characteristics of cryptocurrencies that enable you to make some good profits?
First, cryptocurrencies made to the mainstream currently, thus all the news about them or rumors are quite “hot”. After every statement of Chinese government officials on possibly regulating and banning cryptocurrency market totally we observe vast movements of the price, you will get complete details of this at Crr.News.
Secondly, trend of cryptocurrencies is like the “store of value” – many investors think of these as the backup investment alternative to stocks, the physical assets such as gold or fiat currencies. Speed of transfer also has a big influence on volatility of cryptocurrency. With some fastest ones, transfer takes simply few seconds (or a minute), that makes them an excellent asset for the short term trading, and if there’s no better trend on other kinds of the assets.
Important to understand certain things
What everybody must keep in mind – speed as well goes for lifespan trends on the crypto currencies. Whereas on the regular markets trends may last some months or years – here it happens in some days or hours.
It leads us to our next point – even though we’re speaking about the market worth billions of dollars, still it is the small amount compared to the daily trading volume of traditional currency market and stocks. Thus, single investor making hundred million of transaction on the stock market won’t cause vast change in the price, but on the scale of the crypto currency market it is one noticeable and significant transaction.
Since crypto currencies are the digital assets, they’re subject to the technical and the software updates of the cryptocurrencies features and expanding the blockchain collaboration that make it very attractive to potential investors. Such elements are the reasons we’re observing such a vast changes of price in cryptocurrencies within some days or weeks.
However, answering the first question – the classic rules to trade is buying cheap and selling high – thus having short and strong trends daily (instead of the way weaker ones that will last some weeks and months like on the stocks) gives more chances of making the decent profit when used rightly.