Volatility is an umbrella term referring to the change or deviation in the state of something from a standard value. The higher volatility of a substance or an asset depicts the greater uncertainty of its being present at some value.
Best Ways To Deal With Cryptocurrency Volatility
In the financial market and trading, volatility is the measure of the rapidity and frequency of the change in an asset’s worth. The higher volatility of an asset means the greater uncertainty of losing money and gaining profit.
But, highly volatile assets are the potential for the financial market to rise and fall instantaneously. In this article, we will clear all your doubts regarding the query ‘ How to deal with cryptocurrency volatility ‘
What Is Cryptocurrency Volatility
Volatility is the rapid fluctuation in the valuation of assets. Every currency undergoes this variation. There can be high and low volatile assets.
High volatile assets such as cryptocurrency, whose values change rapidly within a short period and the less volatile assets are very unlikely to cryptocurrency, such as fiat currency.
These fluctuations in cryptocurrency are not because a particular person or governing body wants and changes it.
But, the market decides itself. The nature of the trade of a particular currency will lead to this variation. The more massive the trade, the higher the volatility, so the riskier the investment in an asset.
How Can We Survive The Volatility Of The Crypto Market?
Investment and trading with cryptocurrencies is not a cup of tea. It requires lots of patience and financial management.
Investment may seem easy to some investors, but gaining profit out of it is much more stressful. Here is how you can manage your stress and can prevent yourself from trades leading to bankruptcy.
Manage Your Emotions
Cryptocurrency trading is appealing and unappealing to many based on their experiences. Some, those who earned profits, are happy, and some who lost the game took their steps back.
These were the emotions that overshadowed you while trading. And, because once you gain and lose your money, do not decide that every time you lose and gain.
But trading safely and managing emotions will take you either a step further or will dig you down.
And in the market, some scammers will try to manipulate you by triggering rampant emotions. React consciously, manage your emotions and save your hard-earned money.
HODL originated from the misspelled HODL. HODL, an abbreviation for HOLD ON FOR DEAR LIFE, was written by a user named Gamekyuubi on BitcoinTalk. Later, he stated,
“I typed that title twice because I knew it was wrong the first time. Still wrong. w/e. GF’s out at a lesbian bar, BTC crashing WHY AM I HOLDING? I’LL TELL YOU WHY. It’s because I’m a bad trader and I KNOW I’M A BAD TRADER.”
Holding is holding your assets for a long time even though at some time the market is performing preferably well. By holding your assets, you can prevent loss.
Stablecoins are a new type of cryptocurrency that aims to provide price stability in the volatile crypto market.
Because of the price volatility, cryptocurrency is not a perfect fit in the real world. Then Stablecoins came into the picture and are playing a vital role.
Pegged currencies, collectively called Stablecoins, are backed by government-supported currencies like U.S. Dollar or the Metal values like Gold.
Stable coins alternative to cryptocurrency can be used for buying goods and selling them or offering services on the blockchain Networks.
Trading on stable coins is much similar to the investment in the stock market and in Gold which has very low volatility than the revolutionized assets.
Staking and Lending
Staking and lending in the crypto industry are new concepts. In the real world, banks or anybody can lend their money on behalf of the collateral and for the interest.
Now, because you are HODLING, you can lend them to earn passive income using any lending platform.
You can stake your assets on an exchange which, as a result, will reward you. In staking, you lock your coins for a chosen period.
Staking means you are allowing blockchain to use your assets for transactions and earning a friendly interest through it. Almost all the exchanges offer their users a stake.
Parting Thoughts On Crypto Volatility
Trading is an overwhelming task in such a volatile market. Predetermination does not work here.
Your purpose in trading is always to gain profit at a low purchase. But, in a highly volatile market, you end up losing your money if knowledge and understanding do not back your every step.
Yes, it is also possible in this fluctuating market that you can gain high profit even when it was least expected.
For the large profit income, you must keep in mind all the points described above. Try to overcome the fear and emotional instability, then only you can be a long-player in the crypto market.