Volatility is a word whose word meaning is volatility. In financial markets, it is defined as the volatility experienced in the price of a certain product over a certain period of time. In situations where volatility is involved, the price moves very quickly in both directions, which worries investors. The same situation is seen in the crypto money markets. We can even say that the volatility is higher in this market. In this case, let’s examine 5 things that everyone should know about the volatility of bitcoin, which is seen as the gold of crypto coins.
Bitcoin is the cryptocurrency with the lowest volatility
Bitcoin
is the crypto money with the lowest volatility among crypto coins. This indicates that it is the least variable. The fact that it is the longest-standing cryptocurrency works in favor of bitcoin’s volatility and makes it less volatile than others. Although it is high compared to normal currencies or financial instruments, we can say that it is quite stable in the crypto money market. This is a situation that pushes investors to invest in bitcoin and makes them trust more. It is also the most liquid cryptocurrency. It is possible that it can be easily redeemed in most parts of the world. All of these situations reduce the risk of investing in bitcoin.
Price changes bring with them high volume.
When we examine the chart of an instrument, we see that when price changes increase, trading volumes also increase, this is generally the case. However, in bitcoin and in fact in crypto coins in general, this situation is intense. In the event of a rapid price change, investors in the market panic and try to close their positions, which can drastically reduce prices. When this happens in a stock, companies can act as market makers, but not in bitcoin, because it is not connected to a center. There is no governing body behind it to balance the situation in the market. In such cases, it is necessary not to experience the fear of missing the opportunity (FOMO) mentioned in one of our previous articles and to act cautiously.
Bitcoin moves along with the prices of other cryptocurrencies
The price of Bitcoin rarely changes on its own in the cryptocurrency market. When there is a change in price, we see that other crypto coins also change. Not just a price change, but also news or trading activities that concern bitcoin affect other currencies. The only exception to this is ethereum.
Ethereum
has been able to act independently of bitcoin in recent times. This is actually a situation that shows that Ethereum is strong.
Bitcoin can match the volatility of other currencies.
As we are saying now, the volatility of bitcoin is still high compared to other fiat currencies (the currency controlled and printed by Governments). However, this may change in the future. Because fiat currencies are adversely affected by the changes in the world. Bitcoin has not performed too badly in recent years when looking at other fiat currencies. After a while, when investors adopt cryptocurrencies, bitcoin will also stabilize and will be able to reach a parity at this point.
It is possible to trade on the volatility of Bitconin.
We can say that volatility is a derivative that changes according to changes in the value of a financial instrument and can be traded through options. ( Option : An agreement that gives the buyer the right to Buy or Sell a certain financial asset at a predetermined maturity at a predetermined price, while giving the seller an obligation to buy or sell.) Options are used for speculation (forecasting into the future) or hedging (hedging). You can trade options by speculating at the point where you think the price of Bitcoin should reach the upper barrier or the lower barrier. Or maybe you’re a company that pays your employees with Bitcoin but you earn dollars, in which case you can limit the conversion rate by hedging. Although it is not yet a common process, we expect its examples to increase as the technology improves.
