Everyone who wants to invest must take into account different factors, such as the type of investment they want, the option that most appeals to them, how much they want to invest, etc. However, one factor that is common to all types of assets is the level of volatility. It is clear that not all assets have the same volatility, but in the case of cryptocurrencies it is something you should always take into account. So we want to help you in this task.
As you may well know, in traditional finance volatility is defined as the statistical measure of the dispersion of the price of an asset. In other words, volatility describes the degree to which the price of an asset fluctuates over time.
The reason to pay close attention to this is that it measures risks. Something that is closely linked to this is that before investing in cryptocurrencies or whatever, you must be aware of your risk tolerance. This is because this is always the first step before starting any form of investment.
Volatility level in the cryptocurrency market
While it is true that volatility varies from one asset to another, it also varies greatly within the same market. For example, in the cryptocurrency Bitcoin does not have the same volatility as a stablecoin, and therefore each one has certain types of people interested in them. In other words, the volatility level of one is more attractive to many than the stability of others, and vice versa.
Therefore, there are investors who look to cryptocurrencies for a wide profit margin and therefore assume the risk that is linked to their volatility. In other words, higher investment risk is associated with a higher probability of generating better returns. It is what we know risk-return.
Thus, since the origin of the cryptocurrency market, its value has fluctuated widely over the years. For many speculation and uncertainty are synonymous with cryptocurrencies, as is volatility and possible profit margin.
If you are new to cryptocurrency investing then this scenario is understandably a little scary for you. After all, the idea is not that you lose everything in one day due to disinformation. However, below we show you the current status of volatility in this market.
Analysis of recent volatility in the cryptocurrency market
According to the volatility index of Bitcoin, the leading cryptocurrency in the market, the percentage of volatility in the last 30 days has been 4.59%. Likewise, in a wider range of 60 days, the percentage has been 7.94%.
If we look at the volatility graph of Bitcoin in a year, we will notice that this month has been the most volatile by far. And we must remember the fall of last March 12. However, a certain continuation of volatility is also expected due to the possible effects of Bitcoin’s Halving.
Many experts even recommended taking advantage of that drop to acquire Bitcoin and wait for it to rise in May after the Bitcoin Halving that we still await.
Whether or not this event will meet everyone’s expectations is still unknown, but we can consider that BTC has been recovering after the aforementioned fall. The volatility detected in the market at the time was what prompted many to invest at that time.
Another more general indicator is the Bitgur Volatiliy Index (BVI). The BVI shows the level of uncertainty in the cryptocurrency market. As the price variation increases, it increases, and as it decreases, so does the index.
The BVI is currently at 29.68. It is considered low when it is below 50. In the last month, it also had a peak in March, due to the volatility that Bitcoin had in March. At that time it exceeded 100 on the BVI scale, which is considered quite high.
Taking into account the aforementioned indicators, we can say that the cryptocurrency market, led by Bitcoin, maintains a healthy range of volatility. The latter allows many to carefully prepare their strategies while waiting for the Bitcoin Halving and decide whether to bet on the short, medium or long term.