Cryptocurrencies are grabbing many investors’ attention lately, but the high price volatility scares others.
The thing is, volatility has been part of the crypto industry since its very beginning, and no one knows when and if it will stop; the key is to look for ways to mitigate and profit from it. It is not that hard if you take your research seriously and don’t jump to trade or invest in crypto immediately after discovering its existence.
All that matters is the way in which you manage your digital assets; in that case, the market’s volatility will come second.
The Wild West might not be that hard to go through. If you have the right strategies in place, you can profit from the price movements – in either direction.
Crypto’s volatility can be healthy and necessary, as it creates opportunities for traders to purchase and sell high or short an asset they forecast to fall in price.
Here are valuable facts about volatility and ways to turn it into profit:
Why Is Crypto So Volatile?
The question on everyone’s lips, “What causes those price movements” needs an adequate answer: The simplest explanation would be that crypto is still in the early stages.
But crypto is a fast-growing market, and even at this stage, it’s still volatile. The truth is that several other factors influence the prices of these virtual coins, including their scarcity and utility.
You have probably seen that a cryptocurrency increases its value when it starts to be used by influential people. Take the example of Elon Musk, who announced that he is going to accept Bitcoin as a payment form for Tesla cars.
Meanwhile, his declaration changed, and at the beginning of this year, he stated that people could use dogecoin to purchase his cars, boosting the asset’s value. Nevertheless, these things happen often, so ensure you are well informed about the utility of a particular cryptocurrency before investing in it.
Even the world’s largest cryptocurrency has undergone significant fluctuations throughout the years. Do not think that it has always been so stable. At the moment of its development, Bitcoin was only a few dollars, not thousands, as it is today.
So, what contributes to these price movements that characterize many of the existing digital currencies?
Did you know that there is a specific number of cryptocurrencies that can be mined? Thus, the rarer they become, the more expensive they will be. For example, the total number of Bitcoin individuals can mine is pre-established in the protocol at $21 million; that is one of the reasons the cryptocurrency’s value has skyrocketed so much during the last few years. More and more people started investing in it, hoping it would bring them impressive profits in the future.
There are also burning cryptocurrencies that remove themselves from circulation to become scarcer and thus increase the value of the remaining ones. Such tokens include shiba inu, ethereum, and binance coin.
As previously mentioned, how many people, what people, and for what purposes use cryptocurrencies will further determine their value. Similarly, if more individuals would spend their virtual coins to purchase products and services instead of simply keeping them in an electronic wallet, their prices would increase.
With increasingly more companies embracing crypto as a payment form, these virtual coins are likely to touch the skies. Among the many products that can be bought with crypto are car dealerships, jewelry, tech products, and even food.
In crypto, there is talk about the so-called whales. But what are they, and what do they do so that they influence volatility? These whales are nothing more but investors that hold huge amounts of holdings. In fact, according to Economic Times, these individuals have about 40% of the existing bitcoin tokens. When whales start selling, the magnitude of a crash can exceed limits, especially if millions, if not thousands, of dollars are at a stroke.
Top Cryptocurrencies That Whales Are Investing In
Apart from the famous bitcoin, dogecoin, and shiba inu, there are cryptocurrencies (some more explored than others) that managed to lure whales. Investors are hence interested in investing in:
- tamadoge (TAMA)
- battle infinity (IBAT)
- cardano (ADA)
- lucky block (LBLOCK)
- ethereum (ETH)
- polygon (MATIC) (it is emerging as one of the most profitable assets in 2022)
- decentraland (MANA) (an upcoming metaverse platform)
Ethereum, for example, has generated a buzz lately, as it is a platform that allows creators to develop various applications and investors to take their crypto adventure to the next level.
Besides, ethereum 2.0 is expected to be launched on 19 September 2022; this will be, without a doubt, a major event in the crypto world that will attract hundreds of whales.
Ethereum 2.0 promises to be focused on a PoS protocol, meaning that transactions would be more secure and the platform more sustainable. With this event in the game, investors are looking to buy ethereum for upcoming gains.
So, if you want to follow their example, ensure you are well informed about what this crypto has to offer. And most importantly, check the ethereum price regularly not to fall victim to a dramatic change in value. It would be recommended to use Binance as the main information provider, as it offers real-time data regarding crypto prices.
Many of the above-mentioned cryptocurrencies are also highly volatile, which makes them a direct target in the eyes of engaged investors and traders. Coins such as ethereum, tamadoge, shiba inu (SHIB), stellar (XLM), and litecoin (LTC) are estimated to reach unbelievable fluctuations in 2022, so you would better be on the lookout.
To invest or not to invest?
Volatility is undoubtedly something to be mindful of when embarking on the crypto journey, but it should not be an impediment. If you inform well before investing or trading and have the right strategies, there are fewer chances to lose.
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