When you get involved in cryptocurrency investing one of the first things that you will notice is just how volatile this market is. In fact if you listen to crypto experts like Robert Testagrossa, they are very outspoken on warning people about this level of volatility. People think that stocks and shares can move but that is nothing in comparison to what will happen in the cryptosphere.
This is exactly why anyone who is looking to invest has to take caution, and why they should all be prepared for a market which can move incredibly quickly, both up and down. So why exactly is this such a volatile market in the first place? Well the answer to that is rather complex, but these are the factors which are making the biggest difference when it comes to crypto volatility.
Whale Movement
Sadly one of the biggest factors of crypto than causes people to be concerned about it is the way that mass investment can still move the price so easily. This cannot happen in the world of stocks and shares, at least it is very difficult, because of the measures that are in place. In the crypto world however, which is largely unregulated, this can happen with ease. Whales are massive investors who buy and sell billions of dollars worth of crypto, a single purchase or sale from them can quickly change the price.
Fear Index
One crucial index when it comes to crypto is the fear index, and this is a picture of what people are doing who basically buy and sell out of fear. This is the fear that low level investors have based on what they see and hear about crypto, and they will react based on that. The more fear that people have, the less likely they are to buy and the more likely they are to sell, which greatly pushes prices down. If there is no fear, people buy, nobody sells and the prices go up. This can take a single tweet from the likes of Elon Musk to happen, and boom, the price changes.
Trust
Whether we like it or not there still just isn’t the trust in the crypto world that there should be. What we are talking about here is trust from the big banks and from governments. Owing to this the prices are fluctuating all of the time, because of the uncertainty. If there is one thing that the markets hate, it is uncertainty, and that is one of the key reasons why there is so much volatility in the crypto world.
What this means for investors is that they must take care when they are spending their money. If you are trying to get in at the right time then wait for a dip and invest, if however you have already invested, try not to let the changing prices concern you, simply invest and then allow the prices to do whatever they have to do, without worrying about it.
