This year we can observe that cryptocurrencies move up and down 15% of the value on a daily basis. Such changes in prices are known as an instability. But what if … is this completely normal and sudden change a feature of cryptocurrencies that allows you to make a good profit?
First, cryptocurrencies have taken it into the mainstream very recently, so all the news about them and rumors is “heated”. Perhaps after every statement by government officials about controlling or banning the cryptocurrency market, we notice huge price movements.
Second, the nature of cryptocurrencies is another “store of value” (as gold was in the past) – many investors consider these as options for backup investing in stocks, as physical assets like gold and fiat (conventional) currencies. Affects cryptocurrency volatility as well as transfer speeds. With the fastest, the transfer takes even a few seconds (up to a minute), which makes them a great asset for short-term business, if there is currently no good trend for other types of assets.
What everyone should keep in mind – that speed also goes for a lifetime trend in cryptocurrencies. The regular market can last for months or even years – here it takes place in a few days or even hours.
This brings us to the next point – although we are talking about a market worth billions of US dollars, it is still a very small amount compared to the traditional currency market or stock. So a single investor will not make a huge price change by trading 100 million in the stock market, but it is a significant and notable transaction on the scale of the cryptocurrency market.
Since cryptocurrencies are digital assets, they include cryptocurrency features or expanded blockchain collaboration under technical and software updates, which makes it more attractive to potential investors (e.g. Segwit activation essentially doubles the value of Bitcoin).
The combined reasons for these factors are that we are observing such huge price changes in cryptocurrency prices in a matter of hours, days, weeks, etc.
But answering the question in the first paragraph – one of the best rules of the business is to buy cheap, sell high – so having a short but strong trend every day (rather than keeping the weak ones permanent for weeks or months) gives a lot more chances if used properly. To gain modesty.