This year, we can see that cryptocurrencies are up and down by 15% every day. Such price changes are known as volatility. But what if … this is completely normal and sudden changes are one of the characteristics of secret currencies that make a good profit?
First of all, the secret sources have recently been introduced to the main characters, so all the news and rumors about them are “fresh”. After each statement by government officials regarding the regulation or restriction of the currency, we will see significant price action.
Second, secrecy is more like a “value store” (as it used to be in gold) – many investors consider these physical assets, such as stocks, gold and futures, as a reserve investment option. Transfer speeds affect the variability of currency encryption. Transferring to the fastest takes just a few seconds (about a minute), making them a great asset for short-term trading, if there is no current trend in other asset types.
One thing everyone should keep in mind is that this pace goes hand in hand with life-changing trends in cryptocurrencies. It can take months or even years for regular market trends – here it can take days or even hours.
This leads us to the next point – although we are talking about a market worth hundreds of billions of dollars, it is still very small compared to the traditional exchange market or stocks compared to the daily trading volume. So, an investor who makes 100 million trades in the stock market does not make a big difference in price, but this is a significant and interesting transaction in the crypto currency market.
As digital currencies are digital assets, they are expanding technical and software updates or blockchain collaboration for investor behavior, making it more attractive to potential investors (as SegWit activation has basically doubled the value of Bitcoin).
Combined, these factors are the reasons why we see such dramatic changes in the exchange rate of hours, days, weeks, etc..
But answering the question raised in the first paragraph – one of the oldest trading rules is buying cheap, selling high – so having short but strong trends every day (instead of weak weeks such as weeks or months like stocks) offers many more opportunities. Properly covered, it will withstand a great deal of adverse conditions.