Bitcoin Volatility By Time Period

When media outlets announced Proshare’s introduction of its Bitcoin Strategy ETF (exchange-traded fund) in late October 2021, Bitcoin’s price skyrocketed over the next few weeks. Investors jumped at the chance to gain exposure to a cryptocurrency on an official exchange, causing a price jump to almost $69,000. Bitcoin volatility is also partly driven by the varying belief in its utility as a store of value and method of value transfer. A store of value is an asset’s function that allows it to maintain value in the future with some degree of predictability. Many investors believe that Bitcoin will retain its value and continue growing, using it as a hedge against inflation and an alternative to traditional value stores like gold or other metals. A smart contract enables multiple scripts to engage with each other using clearly defined rules, to crypto volatility trading execute on tasks which can become a coded form of a contract.

Will Crypto Recover Again? A Closer Look on Cryptocurrency Market Volatility

The constant buzz of news, updates, and speculation in the crypto market can be overwhelming, particularly during volatile periods. Negative news and scare tactics can cloud your judgment and lead to impulsive decisions. If your stop-loss order triggers during a brief price drop, you might end up selling your coins too early and miss out on potential gains if the market recovers. During periods of high volatility, the order may be filled at https://www.xcritical.com/ a slightly lower price than you specified due to rapid market fluctuations, particularly in low liquidity cryptos. Past events show that the crypto market has experienced numerous boom-and-bust cycles.

Factors Influencing Cryptocurrency Volatility

On the flip side, some investors might liquidate their crypto holdings to cover losses in traditional markets, causing a decline in crypto prices. Since volatility increases the odds of unexpected and dramatic price changes, more volatile digital assets have the highest risk profile in the crypto space. Bitcoin prices are volatile for many of the same reasons other investments are—supply and demand and how investors react to hype, news, and regulatory actions. The main difference between bitcoin and other investment prices is the magnitude in which its price changes. It isn’t uncommon for Bitcoin to have a $2,500 difference between its high and low price for one day—the most volatile stocks see price ranges measured in tens of dollars.

An overview of crypto and market volatility

Technical analysis tools can assist in predicting and managing volatility, while diversification and portfolio management strategies can mitigate risk and maximise returns. Government regulations or policy changes can affect how cryptocurrency can be used and is viewed, leading to increased volatility. A recent example is the approval of spot Bitcoin exchange-traded funds (ETFs) in the US, which led to billions of US dollar inflows into the funds and price volatility. You can buy Bitcoin on government-approved cryptocurrency exchanges like Coinbase. CoinMarketCap does not offer financial or investment advice about which cryptocurrency, token or asset does or does not make a good investment, nor do we offer advice about the timing of purchases or sales. Please remember that the prices, yields and values of financial assets change.

Understanding Healthy Market Volatility

In the last few months of 2023, investor expectations of ETP approvals drove Bitcoin’s price from about $27,000 to more than $43,000. Volatility is nothing new for cryptocurrencies and, in fact, should be expected. There have been six periods of significant decline in bitcoin (along with other altcoins) since bitcoin’s inception in 2009. Before you decide whether you want to invest in crypto, you need to know if you’re up for a bumpy ride. Can you imagine losing 30% of what you have in your bank account in one day? If that mere thought made you break out into hives, cryptocurrency may not be a good investment for you.

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When traditional financial markets experience turbulence, such as during a recession or a major economic crisis, cryptocurrency prices can react in various ways. Bear markets have historically flushed out malinvestment across asset classes. During the dot-com crash of the 2000s, many internet-based companies were forced into bankruptcy.

How to approach speculative asset investing

Since then, its price has increased by tens of thousands of dollars—sometimes rising or falling by thousands within one day. When you look at the list above, it does tell the story of a highly volatile, risky asset. But viewed through the wider lens of speculative assets, this volatility is comparable to other growth assets, even some of the largest equities in the world.

How Does Leverage in Crypto Impact Volatility?

The Biden administration has taken a somewhat harsh stance on cryptocurrency, overseeing an ongoing regulatory crackdown on the industry. Crypto investors and experts are hopeful the new presumptive Democratic presidential nominee Kamala Harris will be less antagonistic to the crypto community than Biden has been. Despite the launch of nine spot Ethereum ETFs, the 2024 Ethereum rally took a breather in July. After the hype died down and investors realized the ETF was linked to Bitcoin through futures contracts traded on the commodities market, prices dropped back down to around $50,000.

How High Can Bitcoin’s Price Go?

This gives a trader quick access to capital and increases your potential gains by 2x, provided the trader is on the right side of the trade. In the last two days, bitcoin’s price surged from a low of $7,750 to $8,500, marking almost a 10% increase. Bitcoin retested $8,500 twice, and after a failed breakout the bulls got exhausted and the bears took over, forcing BTC to go lower.

Crypto whales can manipulate crypto prices, no matter the cryptocurrency, be that Bitcoin, Ethereum, Dogecoin, or otherwise. As the amount of available coins increases, however, the price of those coins will drop because more people will have the incentive to buy them, and more of them will be willing to sell them. Thus, the market becomes more competitive, and prices may drop as a result. Cryptographic hash functions are vital for online security as well as crypto transactions. Learn more about what hash functions are and how they relate to digital assets.

For example, Binance is based in Tokyo, Japan, while Bittrex is located in Liechtenstein. While there are many reasons for why an exchange would prefer to be based in one location over another, most of them boil down to business intricacies, and usually have no effect on the user of the platform. While these periods of turbulence can be unsettling, understanding the factors behind them can empower you to make informed decisions. By adopting a strategic and patient approach, you might even discover opportunities that arise during market fluctuations. Despite its inherent volatility, the cryptocurrency market has significant long-term growth potential. By focusing on this potential and avoiding being swayed by FUD, you can make informed decisions that align with your goals.

The cryptocurrency market flourishes through constant technological innovation. Sustaining its growth requires the industry to evolve alongside advancing technologies continually. One of the main factors contributing to the volatility of the cryptocurrency market is government regulation. Governments worldwide are still figuring out how to handle the rise of digital currencies, leading to a mix of supportive and restrictive policies[1].

While news headlines paint a bleak picture, history offers a more balanced perspective. While cryptocurrencies offer strong encryption, they are not invincible to hacking, fraud, or vulnerabilities. Therefore, crypto’s future depends on its ability to address current scalability issues. Faster and cheaper transactions are crucial to increase the appeal of cryptocurrencies for broader adoption. In the world of cryptocurrency, this translates to slow transaction processing times.

This technological advancement may help address security risks and boost investor confidence, contributing to price stability in the long run. Conversely, tweets from influential figures or announcements from major financial institutions can cause significant price swings[3]. This event can trigger fear of missing out (FOMO), causing investors to pour money into the crypto markets without hesitation. Through thorough research, risk management, and disciplined trading strategies, traders can navigate market swings and minimise potential losses.

Our community is about connecting people through open and thoughtful conversations. We want our readers to share their views and exchange ideas and facts in a safe space. This game was extremely popular in developing countries like The Philippines, due to the level of income they could earn.

When crypto traders diversify their portfolios, they buy multiple digital assets with different risk profiles rather than concentrating all their funds into one cryptocurrency. For example, some traders buy Bitcoin to take advantage of its relative stability versus more speculative altcoins. Mixing established cryptocurrencies with higher-risk projects in different segments of the crypto industry helps traders mitigate the overall price volatility of their holdings.

Investors have had access to SEC-approved Ethereum futures ETFs since October 2023, but the new spot ETFs are the first to invest in the cryptocurrency itself rather than cryptocurrency derivative contracts. As such, it is a reasonably stable commodity, as far as price, demand, and supply go. In the U.S., brokerages and companies began applying for approval of bitcoin-related securities in 2013. The Securities and Exchange Commission fought back for more than ten years until finally approving several exchange-traded products that held bitcoin in January 2024.

NFTs are a new and innovative part of the crypto ecosystem that have the potential to change and update many business models for the Web 3 world. The world of crypto now contains many coins and tokens that we feel unable to verify. In those situations, our Dexscan product lists them automatically by taking on-chain data for newly created smart contracts. We do not cover every chain, but at the time of writing we track the top 70 crypto chains, which means that we list more than 97% of all tokens.

• Please remember that the prices, yields and values of financial assets change.
• The volatile nature of cryptocurrencies means you should always be prepared for market swings and embrace unpredictability.
• A huge proportion of the value created and stored in cryptocurrency is enabled by smart contracts.
• We primarily focused on 4 key exchanges – Coinbase, Gemini, Kraken and Binance where the pricing and volumes are more trusted.
• The cryptocurrency market flourishes through constant technological innovation.
• Bitcoin, made publicly available in 2009, began its rise to popularity around 2010 when the price for one token rose from fractions of a dollar to $0.09.

Uncertainty about future legal frameworks can make investors hesitant, leading to market volatility. In essence, volatility is a prominent feature of the cryptocurrency market that cannot be ignored. Further understanding volatility can allow traders to develop effective strategies to navigate market swings.