It is quite natural for markets to be a little volatile, for it is a part of it. Here, the volatile nature of the crypto market on a global scale is being explored rather than the traditional markets. But before we venture into the volatile aspect of the cryptocurrency market, it is important to know the actual meaning of the term. The term volatile refers to the change in the price of a given. This change can either be steady with a normal or manageable change in the price or can be extreme if the price goes up or down all of a sudden.
Take a look at the volatility of cryptocurrency market
Even though a steady market is considered to be an ideal market, however, there might be circumstances where a sudden change in the price can be considered or deemed as a chaotic market, that is undergoing loss or uncertainty. In situations where there are extreme conditions arising, the price keeps fluctuating from one end to the other. This, in turn, makes them, the traders put more bets anticipating the inclination of the next swing and thus giving rise to more volatility in the market.
There have been various such situations recorded wherein market volatility has reached its peak. However, it is also important to keep in mind that situations such s these are quite rare in a market. The most often witnessed trend in the market is that of a steady market with the price remaining steady as ever. In this type of trend or volatility, the traders put beta only when they respond to certain news or information. They respond to different kinds of factors and take them. to consideration they take the necessary steps.
These traders or businessmen take into consideration several factors before buying or selling assets. But first and foremost, they assess the market to recognize what the trends are and thus decide upon whether to buy or sell an asset. They consider what the factors or situation would be at a particular time and how they could affect the price of the asset at the time of selling or buying. The range that is considered to be healthy for the market is between 12 to 20. When the range falls above 20 or below the given range, then it is said to be at an extreme.
However, when the volatility of a market is assessed over the years then it seems to be quite steady, as has been recorded over the years. Three kinds of criteria mount to market volatility as recorded, especially since the 1980s. These are s follows:-
• the speed with which news travels and influences the action or investment of the traders.
• The rise in the entry of institutional investors who possess the ability to make huge transactions.
• The emergence or rise in the market derivatives has been recorded to have an impact on the traditional markets, even though indirectly.
Learn more about the volatility in the crypto market
Even though the above-mentioned criteria for market volatility need to be kept in mind, it is also important to learn that cryptocurrency volatility is on a whole other level and can be quite confusing to understand. There re no such that can indicate the volatility in the crypto market. However, a study or even a look at the crypto history can tell you that the fluctuations that crypto markets face are much more shocking than those faced by the mainstream market.
However, it should also be borne in mind that the criteria for mainstream market volatility, to some level, is also true about crypto market volatility.