The cryptocurrency world only seems to be growing more and more extensive with each passing day. New cryptocurrencies are being introduced on a much regular basis and they are only adding to the pre-existing cryptocurrency arsenal. This has resulted from the profit potential cryptocurrencies have and the belief that they will only increase in the future.
This belief has not been wrongly placed because the cryptocurrency market has risen to the top from a very humble beginning. Take Bitcoin for example – it was considered a joke and a fake currency and was valued at cents when it first came out. Now? The whole investing world has been looking for an opportunity to invest in Bitcoin as it capped the $60,000 mark this year.
According to BitcoinCircuit, Bitcoin is bound to give you value one day or the other if you invest in it. There have been multiple success stories of businessmen who invested in Bitcoin early and reaped its benefits later on to become Bitcoin billionaires. These stories are what drives people to invest in the cryptocurrency market.
However, there are many that choose not to invest in cryptocurrency because of one single factor that’s permanently attached to the cryptocurrency market since the start – its volatility. Many cryptocurrencies are infamous for being overly volatile and dangerous to invest in. These markets can change their tides at any moment and can either give you tremendous profits or huge losses. That’s why many people wish to know what’s the most volatile cryptocurrency and in this article, we’ll discuss exactly that.
What is volatility, and why does it matter?
Volatility, in economic terms, means a market analysis that calculates how unstable and widely-ranging a market’s value is. In simpler terms, if a market is considerably unstable with extreme highs and extreme lows, it is usually considered a volatile market. Volatility is a tag that is mostly attached to the cryptocurrency market because of its unstable nature.
Since cryptocurrencies are still in their young phase and have barely started out as markets, and even the simplest occurrences impact their value and flow greatly. That’s why most investors tend to stay away from cryptocurrency because of its volatility. As a general rule of thumb, the more volatile a market is, the riskier it is to invest in it and many investors are unwilling to take the risk to invest in cryptocurrency.
Volatility isn’t necessarily a bad thing. In fact, it is this very nature that has made crypto investors love and invest in the market all these years. The volatility allows the investor to earn big in one go. If everything goes right, and luck is on your side, you can actually end up getting twice or even thrice the returns of the amount you invested in the market – and all the credit goes to volatility.
Thus, cryptocurrency’s volatility is its redeeming factor and makes it stand out from other stock and commodity markets. If you are an investor who is willing to take risks and wants to earn big in a short amount of time, cryptocurrency is your best bet of doing so.
Which cryptocurrency is the most volatile?
Cryptocurrencies, by nature, are volatile and unstable. This is because the market is still in its infancy and is yet to mature. However, some cryptocurrencies stand out from the rest and prove themselves to be more volatile than others. For example, Stellar has had enormous fluctuations of about 14000% alone this year!
Then there is Ripple which was invented as an alternative to Bitcoin and doesn’t require any form of mining. Considering the furious blows cryptocurrency miners all around the world have faced, many people have started choosing Ripple for their crypto investments. This has caused major volatile fluctuations in its price. The most recent major event saw Ripple’s price increase by 170% out of the blue and it took the market by storm for quite a while.
There is Ethereum as well which is considered as the second most valuable cryptocurrency and while it was increasing in value, just recently it experienced a major slump that proved it is just as volatile as most cryptocurrencies. However, perhaps the most cited and considered to be the most volatile cryptocurrency is none other than Bitcoin.
It holds the most value in the crypto market, but because of its value, it also has the most volatile nature. Bitcoin prices go up and down at the slightest of changes without any foretelling. Its value can’t be predicted at all and short-term traders stay the furthest away from Bitcoin because of this. Investing in Bitcoin is considered to be a gamble – you can either win big or lose hard.
Factors influencing Bitcoin’s volatility
There are several factors that influence the volatile nature of Bitcoin and dictate the flow of its prices. These factors are –
- New market – As we stated earlier, Bitcoin is still quite new. While many people argue that the Bitcoin market is over 10 years old now, it is still not even close to the age of other stock markets which have matured over the years. The youth of the market makes it quite vulnerable to frequent market changes and unstable prices.
- Not regulated by any authority – Perhaps the best, and also the worst, thing about cryptocurrency is that it is not regulated by any form of central authority or government. The good thing is that it does not allow governments to charge you taxes for trading cryptocurrency. The bad thing is, it becomes much more volatile because of it and there is no security guarantee for the cryptocurrency in your wallets.
- Media influence – The media has an immense impact on dictating the flow of Bitcoin’s prices and value. Most crypto investors jump at every opportunity they get so that they don’t lose out on profits. The media takes advantage of this factor by intentionally publishing news that makes investors sell or buy. Just by writing a simple article, the price of Bitcoin can be effectively changed and most crypto investors aren’t too fond of this fact.
Bitcoin is thus the most volatile cryptocurrency right now and is going to be so for the next few years. We hope this article gives you new insights about the crypto world and its volatile nature. If it does, please consider following us for regular updates as it will help us immensely.