This year we can observe that cryptocurrencies tend to move up and down by 15 percent of value. Such changes of price are called volatility but what if that is completely normal and abrupt changes are among the qualities of the cryptocurrencies letting you earn good profits
First of all Cryptocurrencies made it to the mainstream quite recently, therefore all of the news regarding rumors and them are sexy. After every announcement of government officials about banning or regulating the marketplace that is cryptocurrency price moves are observed by us.
Secondly the nature of Bitcoin era is similar to eStore of value such as gold was previously – many investors consider these as backup investment choice to stocks, physical assets such as gold and fiat conventional currencies. The rate of transfer has an influence upon volatility of the cryptocurrency. With the fastest ones, the move takes even few seconds up to a minute, making them excellent advantage for short term trading, even if currently there is not any fantastic trend on other forms of assets.
What everyone should keep in mind – that rate goes for the lifespan tendencies on crypto currencies. While on markets that are regular tendencies might last weeks or even years – here it happens within hours or days. This leads us to the Point – it is still very small amount as compared with trading volume although we are talking worth hundreds of billions of US dollars. Therefore price change will not be caused by a single investor, but on scale of currency market this is a noticeable and significant trade. As crypto currencies are electronic resources, they are subject to technical and software updates of cryptocurrencies attributes or expanding blockchain cooperation, making it more appealing to the prospective investors such as activation of SegWit essentially caused value of Bitcoin to be doubled. These elements Combined are the reasons why we are observing such enormous price changes in cost of cryptocurrencies within few hours, days, weeks.
But answering the Question from the very first paragraph – one of the traditional principles of trading is to buy cheap, sell high – hence having brief but powerful trends daily rather than way weaker ones lasting weeks or months like on stocks gives more opportunities to produce a nice profit if used correctly.