A volatile market is essentially a market that has extremely high rises and extremely low falls within short periods. These rises and falls are in terms of the price of the asset, which in this case, is cryptocurrency. Fortunately or unfortunately, the cryptocurrency market is very volatile as compared to a lot of other markets.
This highly volatile nature of cryptocurrencies like Bitcoin, Ripple, Polkadot, is often seen as a harmful indication. Often people who want to invest in cryptocurrency see the volatility of it and back out. There is no certain way to measure the highs and lows of the crypto market and it is still more volatile than almost any other market. The thing is, this volatility is considered healthy by some people. For an experienced investor, this kind of market is beneficial to earn more in a short period.
Most of the reasons that affect the traditional markets, affect the crypto market as well. Any news that is worthy of speculation affects the crypto market as much as it affects the regular market.
The reasons that increase the value of cryptocurrency also cause it to become more volatile. One of the reasons that cryptocurrencies like Bitcoin, Ethereum, also known as Etherium, Litecoin, Cardano, etc. are so popular is because they have a limited supply.
Another reason is that these cryptocurrency coins like Tether, Stellar, Chainlink, Binance Coin, are all decentralized, like all other cryptocurrencies. There is no third-party authority that has the power to intervene in the crypto market.
Also, cryptocurrency is pretty new. Despite being a few years old, there are no specific reasons as to why there is dramatic volatility in the crypto market. As a result, no recorded history or data can be analyzed to determine the factors that affect it.
Ultimately, “high-risk and high-reward” are major rules of investing, and it also applies perfectly to cryptocurrency. Any and every investment carries a certain level of risk that cannot be avoided. Despite being a relatively young market, it is one of the most volatile and best-performing markets of the decade.
To highly experienced investors, this level of volatility that is displayed by cryptocurrency is an enormous opportunity that can be very beneficial as long as appropriate risk management and tools with common sense are involved.
One of the interesting things about cryptocurrency is that the higher it goes, the lesser the risk involved in investing. The volatility of crypto makes it somewhat of an unknown territory but it involves a nearly easy-flowing transfer of value. Due to this, its value will probably swing according to the news and events similar to what we observe with other currencies and markets.
Today crypto technology is percolating everywhere we go. The gaming industry, financial industry, etc. Artists today are making a massive amount of money simply by selling NFTs online. Believe it or not, NFTs are a very small part of cryptocurrencies.