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Understanding Crypto Volatility

Over the years, cryptocurrencies continue to make headlines and are a hot topic of discussion. Globally, it’s estimated that 1 in 10 people are currently investing in cryptocurrencies, some with full understanding and others are complete novices. Investing in cryptos entails understanding the ropes, vocabulary, and everything in between to make a sound investment decision.

Crypto’s Volatility

The frequency and extent of changes in the value of a currency is what’s called the volatility of a currency. It is measured by calculating the variance of currency price movement to give you an idea of how much crypto you want to invest in.

You can also determine the volatility of your crypto, or any currency by looking at its pair average true range. Alternatively, you can look at its range as a percent of a spot.

Volatility in Stock Trading

Volatility in stock trading is defined as the rapid fluctuation of prices on either side. This means that a high standard deviation value means that prices can either rise or fall or fall and rise again. Quite often, a dive of say 1% in the market indexes makes it a volatile market.

Factors that Affect Market Volatility

Uncertainties can come in a myriad of ways, and all these make investors anxious. Therefore, various factors are capable of spiking up market volatility. These include:

● News

● Politics

● Economic data

● Technical trading signals

● Interest rates

● Earning reports and much more

When the future is predictable the markets stay steady and volatility gets muffled. It is only when the unexpected happens or the future is not clear that market prices change dramatically.

What Causes Volatility?

Uncertainties are the major cause of market volatility in cryptocurrency markets. This can be triggered by inflation and interest rate, tax exchanges, and other cryptocurrency policy. Industry changes, regional, and global events also determine volatility.

How Volatility Affects Your Crypto Investment

Volatility can affect your crypto investment anytime. You may experience either a positive or negative effect depending on the time you decide to trade.

Therefore, to have cryptocurrency volatility that works for you entails a well-thought-out investment plan tailored to your financial goals and financial situations. Such a plan should cushion you during the market’s ups and downs and grab the opportunity once it lies in your favor.

On the other hand, trading can be stressful at times. To avoid stressful trading, you need to be good at handling markets even when they seem unpredictable.

If you won’t compose yourself then you will find them to be uncertain and stressful. This situation, if left unattended can lead to both physical and psychological problems.

Stressful trading may lead to a poor sense of morale and consequently, trading errors. When trading in cryptos, especially during the holiday season, avoid pressures of inconsistent trading conditions as these may lead to uninformed judgments.

Always learn from the professional investors and grasp some of the best investment strategies that work for them. You could as well adapt volatility protection tools such as CurPay to keep your investment safe from volatility.

Effects of Volatility on Your Portfolio — The Good

As much as volatility increases your risk as you are trading, it is possible to exploit countless opportunities in such a market. You can take advantage of volatility in a way that you profit out of it. When the market is moving erratically, you can take a position that will see you predict which way it will head and profit when you are right.

The Bad

With speedy intervals always associated with short-term traders, second-to-second shifts can be challenging and exhausting.

If volatility leads to a decline in crypto prices, traders can experience a fear of missing out and hence make the wrong trading decisions leading to losses.

Traders with significant amounts of crypto regret not having sold their crypto when prices drop beyond their expectations. This could result in traders making hasty decisions that will eventually lead to losses.

Cryptocurrency Volatility Protecting Strategies

Always follow these volatility protection methods for the safety of your cryptocurrencies and to ensure you are investing responsibly.

Have A Strong Financial Foundation

This will enable you to withstand market uncertainties, risks, and potential losses on the road to cryptocurrencies investment.

Find The Right Volatility Protection Tools

Choose reputable volatility protection tools like CurPay, an advanced, easy-to-use AI trading software with AVP. This protects your crypto assets around the clock.

Diversify Your Crypto Investments

Set a max of 10% of your investments to cryptos and then the rest towards your long-term passive financial assets.


As a novice crypto trader, you first have to understand the ropes of cryptocurrency. On the other hand, no avid trader is a professional. Yet things change and volatility can strike hard when you least expect it. Taking care of the negative effects while taking advantage of the positive effects sets you far closer to profits. 

Disclaimer: This content is only intended for informational purposes. Before making any investment, you should always do your own research and analysis.

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