Are Volatility And Fluctuations Good Friends Of Cryptocurrencies: A Small Analysis

Take up any article or resource material on crypto trading or investing and you will come across one common criticism. Volatility and fluctuations are often pointed out as the major criticisms that should inform your decision to invest or trade in them.


Let us get one thing straight- Crypto is not a Safe Investment!


Is it Profitable? Yes!


The entire premise around investing and trading in cryptocurrencies moves on the Risk-Reward principle. If you are willing to take the risks, you stand to win the greatest treasures there is.


In this article, we are going to look at why Bitcoin volatility or Crypto fluctuations are a match made in heaven. If you have been sitting on the sidelines waiting to invest in cryptocurrencies, this article should inform your decisions.


Why is Bitcoin Volatile: What do you need to know?


You need to understand that the ecosystem that Bitcoin and other cryptocurrencies survive in is not formal or official.


In other words, while there is no official ban on trading and investing in them in countries like the US, UK, or Germany, there are no set legalities in place either.


A lot of institutions, individuals, and opinion-makers in the crypto space are still finding their feet as far as cryptocurrencies go. If you have been following the news, you would have read how Elon Musk drives up the prices of Bitcoin and then caused it to come crashing down.


What this does is one of two major things-

  1. Proficient investors who are seeking opportunistic gains rally to secure unreal profits and margins.
  2. Amateurs that believe that holding, trading, and investing in crypto is the same as the stock market suffer major windfalls!

Bitcoin is still very much in its infancy. Serious engagements on the financials and the technology surrounding it have started during the COVID-19 pandemic. There is still a long way to go in terms of volatility and fluctuations.


How to Trade and Invest in Bitcoins for Maximum Returns?


If you want the rewards, you will have to face the risks. This is not only true for Bitcoin or cryptocurrencies but any other investment as well. The higher the risks that are associated with one, the better are the chances of astronomical highs or meteoric lows.


One important thing that even the most experienced crypto investors point out is the fact that you cannot go all out in terms of your investments. In other words, your life’s savings and income cannot be in cryptocurrencies at any point in time.


If you have multiple asset classes, and one of them is a cryptocurrency, you should just leave it as it is and forget. People who are low on finances and look at Bitcoin or cryptocurrency as their only hope should guard against historic lows.


Most analysts state that a Bitcoin high should be measured on corresponding monthly intervals backed by global events.


For example, a positive piece of news in the crypto realm means that it will rise in the next three weeks. If you want to enjoy a healthy profit and experience zero risks, you have a period of three weeks!


Has the Crypto Fluctuation been able to Push Investors and Interests away?


Given so many criticisms and negativities around the fluctuation and volatility of cryptocurrencies, you would expect a significant fall in interest.


Is this the reality? Far from it. Even after Elon Musk’s stunt, Bitcoin and other cryptocurrencies are attracting investors and traders like never before. This time around, people understand that the risks are what make this asset class attractive and engaging.


This has also given common investors and traders an idea about what to expect when engaging in cryptocurrencies. This way, they can understand that while there are rewards to be had, there might also be risks that can exhaust their investments.


If you have any other questions, or queries on crypto investing you would want us to discuss in detail, let us know in the comments section below.


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