Advantages and Disadvantages of the Cryptocurrency Volatility

[Polyxchange]

Advantages and Disadvantages of the Cryptocurrency Volatility

The volatility of the cryptocurrency is nothing but an amplitude that represents the difference between the minimum and the maximum exchange rate of the digital asset. There are many reasons, which cause the volatility: the current situation on the exchange, various external events, so-called human factor, and many other things.

Is the volatility good or bad? It’s simply impossible to give an unambiguous answer because the volatility is too complex and unpredictable thing. Furthermore, the players in the crypto market have 100% opposite opinions about the volatility. As a result, it is reasonable to analyze both the benefits and flaws of the volatility.

Key advantages of the volatility

In fact, all the benefits of the cryptocurrency volatility are obvious for the traders. Here is the deal: if the volatility of a regular asset is less than 5%, while the volatility of the cryptocurrency is higher than 10%, one can use the tangible benefit.

On one hand, one can spend $100 to buy EUR at the lowest rate, the trader won’t be able to earn even $5 when the rate starts to increase. On the other hand, one can spend the same amount of $100 to buy the cryptocurrency and earn at least $10 of profits. This is a very primitive representation, but even a single deal in the world of cryptocurrencies can increase the deposit of the exchange user two- or threefold. This is a key difference in comparison with the Forex or stock market.

It’s worth noting that namely the parameters of the volatility played the key role in the existence and development of the crypto market. Everything is incredibly simple: a huge number of modern and very successful traders came from the world of traditional asset exchanges. Furthermore, a huge trading volume and the overall quality of the trading process, as well as high liquidity and the popularity of the cryptocurrency are the results of the high volatility.

At the same time, there were many people who considered the volatility unpleasant and even bad. It’s no accident because the volatility makes more harm than good in the regular economy.

Main disadvantages of the volatility

The increased level of volatility is the first sign of the high level of risks for the investor choosing the asset. Rapid changes of the rate make traders think that it may fall to the minimum value some day or other. Furthermore, it can reach the state of the demise. Such behavior of the cryptocurrency may antagonize institutional investors from the crypto world.

Rapid changes of the rate create numerous situations when the cryptocurrency equivalent of $100 paid by the trader transform into $75 on the next day. No doubt, there are several people and companies ready to work with the cryptocurrency as the method of payment; however, the majority of organizations and entrepreneurs are not ready to bear such risks.

It’s worth noting that the volatility is pretty hard to forecast or predict. It’s especially true these days, when the legal status of the cryptocurrency is not clear in many countries, while they actively continue to become an integral part of the modern economy. The key problem is almost no one is ready to predict the real behavior of the cryptocurrency in the conditions of the traditional economy.

What is going to happen in the future?

There are many controversial opinions and thoughts about the future of the cryptocurrency and its volatility. Some people think that the crypto world won’t lose this battle, thus not allowing the traditional economy to win the game. Others are sure that countries will create their local cryptocurrencies in order to control them, while the most popular cryptocurrencies will still remain out of centralized control.

Talking about the volatility, we need to understand that it came to stay, thus there’s no chance to see the stable market in the nearest future. Pulling it all together, until the moment when the cryptocurrency will gain full trust, we will see rapid rate changes, which bring as positive as negative events and related consequences.

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[barbara44]

It has been years that no forex trading market and gold market came into existence and yet their market is still not void of volatility, crypto market is a new one and the volatility will still be in the market for a very long time, except maybe we want to start analyzing them separately based on each currency.

Like the currency of bitcoin, I know that bitcoin volatility will not remain for life, it is certain that bitcoin volatility will become very less in future because it was design to have limited supply, with its limited supply, there is tendency of bitcoin price becoming stable in future, maybe in 10 years time, and that is when I assume that bitcoin can start its journey to becoming a global currency because people would prefer to rely on its stability.

[arpon11]

The volatile is an added benefit to bitcoin and I think the major reason why bitcoin became popular in a short time is because of how volatile it is now and people can just buy few units of it and hold for few months and become millionaires in fiat.
I am a day trader and sometimes buying and holding some coins that I expect will grow. I have taken advantage of the volatility of the market to make profits by buying bitcoin low in exchange platform and sell high when it has appreciated.

[hugeblack]

There is a contradiction between decentralization and volatility. Stability means there is a force trying to stabilize the currency for one reason or another.
So the moment when the price stabilizes for long periods means the absence of centralization, but this does not mean that the fluctuations at high range make its decentralization.

What was happening was a price manipulation as it did at the end of 2017, the price is growing but the steady increase/correction is causing doubts about the nature of the currency.

Finally, like it or not, it is the high value of BTC that makes us buy more.

[BITDV]

The volatile is an added benefit to bitcoin and I think the major reason why bitcoin became popular in a short time is because of how volatile it is now and people can just buy few units of it and hold for few months and become millionaires in fiat.
I am a day trader and sometimes buying and holding some coins that I expect will grow. I have taken advantage of the volatility of the market to make profits by buying bitcoin low in exchange platform and sell high when it has appreciated.

  You give an example where trader get profit, what about if volatility make trader loss, is this still benefit?? The answer is yes benefit only for winner 

[Oilacris]

Volatility is just like a double edged sword.You can either get profit or totally loss or blown up your investment on a short period of time.

These are the main advantage and disadvantage of price volatility but somewhat people do really like to engage it up even its highly risky but
they know that it is also highly profitable.You can utilize it if you do know how to play into the market.

[Docnaster]

The biggest disadvantage that you lightly touched upon was the unreliability of the volatility. Don't get me wrong, no open market based tradeable asset is predictable but there is always some method to the madness. However, the volatility on the cryptomarkets are purely driven by very few whales that are entirely unreliable and make riding the volatility of such moves riskier than trading on traditional assets and stocks.

[Eildosa]

It is not so easy to make cryptocurrency stable. All because it is decentralized. Personally, I see only advantages in volatility. I like this freedom, I like that in a short time, with a certain experience and knowledge, you can make money without leaving home. And I think that many with me will agree in this.

[Yamifoud]

It is not so easy to make cryptocurrency stable. All because it is decentralized. Personally, I see only advantages in volatility. I like this freedom, I like that in a short time, with a certain experience and knowledge, you can make money without leaving home. And I think that many with me will agree in this.

It is not the market price stability we look for in order for crypto really amazing, the most important is that prices won't go at very deep or to look dead.

I've preferred to see the market remains at its high volatility rate. Though the risk is too high but our chances to make more money over taking the risk is high also. It is just to have a good market understanding and passionate about what we are doing, we can't lose anything if we never been those fake news and our emotion.

[Herbert2020]

when you call them cryptocurrency then the only thing that high volatility has is "disadvantage" because a currency has to have stable value to be a currency. otherwise it is only an investment and for that it is a poor one specially since most of the altcoins have no future so they can not technically be called an investment even!

but of course if you are just focusing on the short term profit that you could make from altcoins then their volatility is pure advantage because the "pump and dumps" is the bread and butter of the high active traders in the altcoin market to make a ton of money in a very short time.

[SvonioneFromMangoCoinz]

There are many controversial opinions and thoughts about the future of the cryptocurrency and its volatility. Some people think that the crypto world won’t lose this battle, thus not allowing the traditional economy to win the game. Others are sure that countries will create their local cryptocurrencies in order to control them, while the most popular cryptocurrencies will still remain out of centralized control.

Talking about the volatility, we need to understand that it came to stay, thus there’s no chance to see the stable market in the nearest future. Pulling it all together, until the moment when the cryptocurrency will gain full trust, we will see rapid rate changes, which bring as positive as negative events and related consequences.

  Yes, our crypto market needs trust so that investors can make long-term investments.
One of the things that make investors believe is the business' quarterly balance sheets.
If the upcoming projects distribute the balance sheet to investors, I think the crypto market will soon no longer be volatile. Meanwhile, there will be long-term investors and the market of crypto comparable to the stock market.

[irsykes]

Volatile disadvantage i think what OP mention is not really fatal, because we know some people like when a coin or maybe bitcoin itself have rapid movement in it's price. So, it is all about people's perspective because some of them can make it as something advantage for them. But actually what OP mention is good because if people read it, they know risk in cryptocurrency and volatile is something that people must aware.

[Docnaster]

It has been years that no forex trading market and gold market came into existence and yet their market is still not void of volatility, crypto market is a new one and the volatility will still be in the market for a very long time, except maybe we want to start analyzing them separately based on each currency.

In the view I have, I'm thinking the volatility happens because there are no regulation because of no recognition for now. No limitation of how many coins to be dumped and nobody is concern about lost or frauded coins.

No that's not quite exactly why or how volatility works. Simply put it is the financial repercussion that any asset creates on the market due to its demand or the lack of it. It has nothing to do with regulations. And even if regulations were there I don't think there can be any regulatory control over how much of an asset one can sell or buy in an open market. That is against the very definition of open markets.

[Zemomtum]

The volatility will continue to ensue as long new project keep on emerging. Everybody want to belong and begin to implement a project in which numerous services is already available and unused in the crypto circle. This kind of behaviuor will continue for long until we come together and build a service for specific need for example education, hospital, tourism, transportation, agriculture, election etc

[RealMalatesta]

We have to also take a look at WHY we have such a big volatility and the advantages and disadvantages of that as well. The main reason why we have such volatility is that there is no central organization controlling it, believe me if a stock went up and down over 5% everyday for a long time than the government branch looking into it in that country will be asking why it is moving that much and would like to learn why the speculation is so high whereas in bitcoin nobody can do anything about it, it can be 8 thousand one day 15 thousand next day and back to 8 thousand after that and no one can do anything about it.

So, we have decentralization which is great and our advantage but at the same time we are at a risk of wild movements and manipulation by whales which is disadvantage.

[GreatArkansas]

(...)
Some people think that the crypto world won’t lose this battle, thus not allowing the traditional economy to win the game. Others are sure that countries will create their local cryptocurrencies in order to control them, while the most popular cryptocurrencies will still remain out of centralized control.
Talking about the volatility, we need to understand that it came to stay, thus there’s no chance to see the stable market in the nearest future. Pulling it all together, until the moment when the cryptocurrency will gain full trust, we will see rapid rate changes, which bring as positive as negative events and related consequences.

Talking to this, I believe that the future will be like nowadays on the crypto world, just like those exchanges who are creating their every token or coin that has it's own functions, especially on their platform which I also seem that has centralized control. I just can't imagine if in the future this will happen, especially when the volatility is really on the cryptocurrency.

And speaking of volatility, that's also one of the enemies of those people are entering in cryptocurrencies just to earn money or expect easy money and after they totally rekt, they will start crying and keep telling negative things about cryptocurrencies (not all).

Is the volatility we experienced now in Cryptocurrency will be still the same in the future? Like in the next decades? Because for example in Bitcoin, it has only limited supply, as time goes by, bitcoin being produce is decreasing, it can also affect the volatility of Bitcoin's price?

[guoyu78]

It has been years that no forex trading market and gold market came into existence and yet their market is still not void of volatility, crypto market is a new one and the volatility will still be in the market for a very long time, except maybe we want to start analyzing them separately based on each currency.

In the view I have, I'm thinking the volatility happens because there are no regulation because of no recognition for now. No limitation of how many coins to be dumped and nobody is concern about lost or frauded coins.

I am not sure that government will even have that right over any body’s spending limit on cryptocurrency or amount of money that can be withdrawn from the market, it is only in stock that they were able to regulate that and not even in forex trading.

The only regulation we can get is one that will enable people to be able to pay their tax and also the one that will protect the interest of investors, as long as there are sellers and buyers of cryptocurrency, there will always be volatility in the market , but then, everything still depend on the limit of the coin also, I think that the more the supply of the coin reduces, the lower the volatility become because of the scarcity of the coin that may occur along the line, the more expensive it will also become for people to buy it.

[el kaka22]

Governments do not have any right to check what you do with your crypto because it is a sort of currency that can't be stopped, I know most of the time fiat is like that too, what can cops do if you want to buy an illegal drug? Only catch you when you actually do, most of the time you actually spend fiat and get the drug and then get caught, hell they can't even jail you for trying in many places, money really has to exchange hands and you really need to be in possession of the drug.

So, same could happen with crypto for stopping volatility, you can do whatever you want with bitcoin and that will be the decentralized part, but then you need to report it to government or there will be punishment, in those type of cases you can't be stopped on whatever you want and bitcoin is not compromised but you still have to let the government know so you can't create volatility.