In 2018, there was a great market crash that was a hard lesson for so many people in the crypto industry on the high volatility of cryptocurrencies. To many, the fact that the prices of cryptocurrencies have rigorously fluctuated within the space of 2 years beggars belief. As a result, many have seen cryptocurrency as an unstable market that is full of speculation and precarity. The first and largest cryptocurrency based on market capitalization is Bitcoin and it experienced massive growth in 2017, growing from $700 to almost $20,000! That is an absurd rate of return in just 12 months.
Then, it wouldn’t be shocking or unusual if people jumped on the bandwagon. Yet, in just a few years, it would become really unstable once it reached an unprecedented height and there was a drop in its value in 2018. From there, it picked up again and skyrocketed.
Cryptocurrencies are seen as an unpredictable, complex technology that has helped several people build their wealth. Therefore, it is unsurprising that many investors are drawn to the risky state of cryptocurrencies. At this point, we need to define what volatility means
What is volatility?
Volatility is simply a measure of how much the price of an asset has fluctuated over time. In general, the more volatile an asset is, the higher its risks it is considered to be an investment. As a result, it has a higher potential to offer either higher profits or higher losses over a short period than other less volatile investments. However, trading is popular among users. There are several reviews on different platforms, it’s quite east to trade with the Bitcoin Billionaire. That ensures the easy buying and selling of cryptocurrencies.
Why is it important to understand the concept of volatility?
Volatility is one of the most important factors that must be considered when assessing investment risk. Usually, investors will take on a high level of risk if they trust that the potential reward is worth the chances of losing some of their investments.
There are certain factors that can increase the level of volatility. These include news coverage – positive or negative – and earnings reports that can either be better or worse than expected. In many cases, high fluctuations in trading volume often correspond to volatility. Very low volume also corresponds to a high level of volatility.
The high volatility of cryptocurrencies feeds the skepticism of first-time players. However, for most experienced players, they make use of this volatility to build their wealth.
Top 3 most volatile cryptocurrencies
There are several types of cryptocurrencies out there. However, the top most volatile cryptocurrencies are introduced below:
Bitcoin
In terms of market capitalization, Bitcoin ranks as the largest cryptocurrency across the globe. Professionals have affirmed that the high volatility of Bitcoin makes it a high-risk investment that must be approached with total caution. Yet, Bitcoin has promised to keep increasing in value.
Ethereum
This is the second-largest cryptocurrency in terms of market capitalization. However, Ethereum has also gone through a bumpy journey and experienced fluctuations in its prices.
In 2016, Ethereum experienced significant price swings from $10 to $1450 in 2018, which has hit a price of $1943 in 2021. The Ethereum market has a lot of potential and it keeps turning out to be one of the best cryptocurrencies available.
Ripple
This was created to offer a less expensive and quicker payment option for international transactions, Ripple has been affirmed as volatile as its price swings quite often. In November 2020, its price increased by 170% amid growing concerns of the SEC case against the network. Ripple may not be the most volatile cryptocurrency, but it continues to exhibit extreme price spikes when trading.
Conclusion
Cryptocurrency keeps expanding in market value and influence across the globe. Its high volatility ensures that traders or enthusiasts must be careful when they intend to start investing in it.
