The crypto market is currently undergoing a difficult time, knowing that Bitcoin retraced 50% from its All-Time High — for a second time. As a result, many market participants are worried and have difficulty assessing the next move. Crypto is a volatile market, and we all know that. News about the latest price fluctuations are constantly present on our social media feed and give us the impression that this market is hard to handle. But is this happening only with cryptocurrencies and digital assets? The latest news regarding the most famous markets in the world is recording heavy losses, as the whole NASDAQ Index had an ugly correction after many tech stocks bled. Even so, it doesn’t mean that any investment in this market is not generating profit. If we understand how volatility works and what to look at, everything is possible with patience.
Volatility is often associated with significant price fluctuations in both directions, either up or down, pumps and dumps. For example, when a traditional market goes up and down over 1% in a certain period — that particular pair is volatile. Traders talk about volatility when referring to risk, uncertainty, and how significant the price fluctuations will be. A higher volatility means that the value of an asset can be distributed on a higher value range — because an asset’s price can dramatically change in a short period in both directions. A decreased volatility means that the value of an investment does not fluctuate very much and tends to be constant.
What is the value of a cryptocurrency based on?
If we want to understand how the price of a digital coin is decided, we need to look over the value this coin has. Like any other traditional currency, a digital coin earns its value depending on how dedicated the community is:
· what does it require from users?
· deficit and utility
Keeping in mind that most digital coins are made and minted on blockchain by private entities, another crucial factor is the team behind the project and the trust its community gives them. Luckily for crypto investors, the cryptocurrency price can be influenced by the involved community — while in the equity market, the price is influenced by regulations, laws, hedge funds, and news.
Is the price of a digital coin sustainable?
Cryptocurrency prices are influenced by supply, demand, buying/ selling volume, traders’ and investors’ sentiment toward the asset, news about government regulations, and social media hype. These factors contribute to market volatility, but they can be manipulated so that crypto prices remain stable and less variable. For communities that use cryptocurrencies, the most desired thing is for traders to keep the spot coins for as long as possible, so that we can start talking about investors in the crypto market more than traders and their DCA strategy (dollar cost average). Owning cryptocurrencies comes from the conviction that their intrinsic value will rise over time and this collective opinion can create faith in a project. But this is not easy to do since more and more people admit that they don’t know how to trade. Instead, they speculate the price. These traders end up buying or selling based only on the chart’s volatility.
How can we secure a coin’s value?
Cryptocurrency economy, based on Blockchain Technology, cannot adapt to control each situation that’s continuously changing, so semi-centralized solutions or centralized ones can show up as possible answers. Since now, there are only a few actions to stabilize the value of a cryptocurrency. The first would be to maintain the deficit of a coin by controlling the supply of that particular project. Another idea is to make the coin as usable as possible to attract more investors and people that will end up keeping it. By the way, the main reason for the crypto market to be this high is a combination between deficit and growing demand. Cryptocurrencies’ problem is that they’re hard to use outside of crypto exchanges, so it’s based more on debt. Also, IXFI plans to revolutionize this problem by being an All-In-One platform, allowing you to use your coins using a debit card.
Many challenges are hard to overcome without heading towards a more centralized vision.
The best thing we can do is to remain strong together.
· use different Telegram channels
· discussions we can contribute to on Twitter pages or other social media channels
· get involved and dedicated to the cause of growing cryptocurrencies to a whole new level
The market’s volatility is no reason to avoid investing in crypto, seeing as it’s the future of financial systems and we need to be prepared. For a balanced and enhanced trading experience, start your journey with Your Friendly Crypto Exchange, IXFI.
Disclaimer: The content of this article is not investment advice and does not constitute an offer or solicitation to offer or recommendation of any investment product. It is for general purposes only and does not take into account your individual needs, investment objectives and specific financial and fiscal circumstances.
Although the material contained in this article was prepared based on information from public and private sources that IXFI believes to be reliable, no representation, warranty or undertaking, stated or implied, is given as to the accuracy of the information contained herein, and IXFI expressly disclaims any liability for the accuracy and completeness of the information contained in this article.
Investment involves risk; any ideas or strategies discussed herein should therefore not be undertaken by any individual without prior consultation with a financial professional for the purpose of assessing whether the ideas or strategies that are discussed are suitable to you based on your own personal financial and fiscal objectives, needs and risk tolerance. IXFI expressly disclaims any liability or loss incurred by any person who acts on the information, ideas or strategies discussed herein.
