Factors that affect the volatility of the cryptocurrency

By Eybyoung | Crypto learnings | 9 Dec 2020

Mostly small investors or holders of certain assets is afraid or anxious about the volatility of the value of the assets on the market, it is important to know the reason why assets values increase and decrease from time to time.

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Most of us know that cryptocurrency is highly volatile, which means the price values of the assets will change from time to time sometimes high and sometimes low. But what is really the meaning of volatility?

Volatility means the degree of variation of a trading price over time. In other words, volatility indicates the amount of uncertainty about the size change of the assets values. The higher an asset spread of values means the higher volatility of it. To read more about volatility you read it here,https://cointelegraph.com/tags/volatility

Factors that affect the Volatility of Crypto Assets

Supply and demand- Cryptocurrency assets have limitations, unlike the fiat currency where banks and governments can print out money at any time depending on economic inflations. Crypto assets have a market cap, when the demand is high the value increases because the supply is limited. The cryptocurrency rate depends on the balance of supply and demand – this is a market law.
Regulation of the cryptocurrency- One of the most important factors at the moment, which can seriously affect the situation in the cryptocurrency market. Both the news about the prohibition of a particular digital currency or the industry as a whole, and the recognition of the assets as a means of payment influence the rate. As we all know, some countries do not accept cryptocurrency they prohibit using digital assets.
Infrastructure news. Everything that makes the assets closer and its use more easily affects market quotes. The emergence of crypto ATMs, collaboration with the largest payment systems, support of bitcoin payments by the largest retailers or cafes, and restaurants – this kind of information has a great effect on market dynamics and price growth.
Hackers attack - Reports about hack will surely lead to price down in an instant The market reacts instantly and the intensity depends on the site that was attacked.
Listing of coins in top exchange -The ranking of coins affects the price value. Listing of cryptocurrencies, as well as delisting, inevitably causes a change in rate. Information that any new cryptocurrency will be added to the exchange heightens the interest in it. In most cases, adding a cryptocurrency to the exchange leads to an increase in popularity. Listing is rather a positive event that can lead to an increase in price. Delisting is almost always a decrease in price.
News in the media- The volatility of the cryptocurrency rate is largely based on the hype that constantly keeps up the interest. A sharp drop in the rate can be influenced both by the post on a social network and an intentional utterance by a well-known personality of the cryptocurrency world. In the field of cryptocurrency, the news really has a significant influence on the situation on the market.

Volatility is one of the reasons why some people do not want to invest in cryptocurrency, they are anxious about the sudden changes in its price. They are afraid that the price will constantly drop that will result in a great loss of money rather than gains from it.