This year, we can observe that cryptocurrency tend to move up and down, even 15% of the daily. Such price changes are known as volatility. But what if … this is perfectly normal, and abrupt changes & # 39 is one of the characteristics cryptocurrency allowing a good profit?
First of all, cryptocurrency hit the mainstream recently, so all the news and rumors about their "hot". After each application of civil servants on the possibility of regulating or prohibiting market cryptocurrency we are seeing huge price movements.
Secondly, the nature of cryptocurrency more like a "store value" (as gold was in the past) – many investors see them as a reserve investment option into shares in physical assets such as gold and immutable (traditional) currency. transmission rate also affects the instability cryptocurrency. With the fastest of them even transfer takes a few seconds (up to a minute), making them a great asset for short-term trading, if there is currently no good trends in other types of assets.
The fact that everyone should keep in mind – this rate is also associated with trends in life crypto currencies. While in conventional markets, trends can last for months or even years – here it happens in a matter of days and hours.
This brings us to the next point – although we talk about the market value of hundreds of billions of dollars, this is still a very small amount compared with the daily on & # 39 trading volume compared to the traditional foreign exchange market or in shares. Thus, the only investor who commits 100 million of transactions in the stock market will not cause huge changes in prices, but the crypto currency market scale is significant and noticeable deal.
Since the crypt with currency & # 39 are digital assets, they are subject to maintenance and software update function cryptocurrency blokcheyn or expanding co-operation to make it more attractive to potential investors (eg, SegWit activation mainly caused a doubling of the value of Bitcoin).
These elements are combined with the & # 39 are the reason that we are seeing such a big change in prices for cryptocurrency for a few hours, days, weeks, etc.
But to answer the question in the first paragraph – one of the classic rules of trade – buy low, sell high, – so every day is short, but a strong trend (rather than weaker lasted weeks or months, as stocks), gives much more chance. decently to make a profit if used correctly.