This year we can see that cryptocurrencies tend to move up even by 15% on a daily basis. Such price changes are known as volatility. But what if … this is perfectly normal, ակի sudden changes are one of the characteristics of cryptocurrencies that allow you to make a good profit.
First of all, cryptocurrencies have recently reached the masses, so all the news about them և the news is “hot”. After each announcement by government officials about the possible regulation or ban on the cryptocurrency market, we notice huge price movements.
Second. The nature of Pt cryptocurrencies is more like a “value store” (as gold used to be). Many investors consider them a back-up option for stocks, physical assets such as gold (traditional) currencies. Transfer speed also affects cryptocurrency volatility. For the fastest, the transfer takes only a few seconds (up to a minute), which makes them a great asset for short-term trading if there is currently no good trend in other types of assets.
What everyone should consider. This speed is also in line with the life trends of cryptocurrencies. Although trends in regular markets can last for months or even years, here they occur even in days or hours.
This takes us to the next point. Although it is a market worth hundreds of billions of dollars, it is still a very small amount compared to the daily trading volume compared to the traditional currency market or stocks. Therefore, one investor who makes 100 million transactions on the stock exchange will not cause a huge change in price, but this is a significant transaction on the scale of the cryptocurrency market.
Because cryptocurrencies are digital assets, they are subject to cryptocurrency features, software upgrades, or an expandable blockchain partnership, which makes it more attractive to potential investors (as SegWit activation actually doubles the value of Bitcoin).
These elements are combined for the reason that we see such huge changes in the price of cryptocurrencies in a matter of hours, days, weeks, and so on.
But answering the question of the first paragraph. One of the classic rules of trading is to buy cheaply, sell high, and therefore have short but strong trends every day (instead of weaker stocks for weeks or months), giving you much better chances. to make a decent profit if used properly.