Top 3 Most Volatile Cryptocurrencies

CNBC reported an exceptional milestone in April 2021, noting the crypto market's value surpassing \$2 trillion. This highlighted its potential as a significant player in the global financial scene.

Though cryptocurrencies have shown impressive growth, their notorious volatility remains a concern for this nascent market. Bitcoin, in particular, is known for its dramatic daily price changes.

In this exploration, we’ll dive deep into the tremors of crypto volatility. Discover our top three picks for the most volatile digital currencies and learn how to profit from these fluctuations as a savvy investor or trader.

History of Bitcoin Price

Bitcoin, reigning as the largest cryptocurrency by market cap, experienced a meteoric rise from under \$700 to nearly \$20,000 in just 2017—reflecting a staggering 27,000% increase in one year. S&P 500 In contrast, traditional investment growth rates, such as certain stocks, typically pale with only about a 25% rise over the same timeframe.

Many experts claim that Bitcoin's volatility classifies it as a high-risk investment. It should be approached cautiously, yet its revolutionary technology has transformed the fortunes of countless enthusiasts.

Which cryptocurrency currently takes the crown for the greatest volatility in the market? Let’s explore how volatility influences the crypto landscape.

What is Volatility?

Put simply, volatility is a measurement of how dramatically an asset’s price can shift over time. Assets like cryptocurrencies, known for their high volatility, can soar or plunge quite sharply and swiftly. evaluate price factors .

Assets exhibiting extreme volatility are considered high-risk, often presenting opportunities for outsized gains (or losses), much like forex markets, while more stable options like gold and bonds show considerably lower volatility. crypto Despite the risks, the volatility of cryptocurrencies remains beneficial. It stimulates the market, creating profitable trading opportunities and sparking interest that inadvertently fuels growth.

Pros and Cons of Crypto Volatility

On the flip side, Bitcoin's pronounced volatility can deter certain investors, especially those who prefer less risk. Still, even amid such unpredictability, institutional investors have increasingly taken interest. especially in markets like Dogecoin Determinants of Crypto Volatility

The cryptocurrency sphere operates in an environment rife with instability. With the high stakes involved, several key factors drive its volatile nature:

Since its debut in 2009, Bitcoin's rise has been extraordinary. However, the underlying technology is still young compared to traditional financial instruments. For now, investment is often stoked by speculation rather than hard data.

Relative to assets like US equities, which are readily traded, the crypto space is still finding its footing.

Infant Market

The crypto market's infancy and gradual adoption rate have contributed to its volatility. A market with low liquidity is vulnerable to manipulation, leading to practices like 'pump-and-dump'.

Low liquidity

The open-source, complex nature of cryptos has made them hard to regulate, creating a fertile ground for market manipulation. Accusations abound of exchanges inflating trade volumes to artificially raise demand and cause erratic price shifts. low liquidity Ultimately, an asset's worth is tied to its practical use and how widely it is adopted, raising questions about crypto's volatility.

Unregulated markets

The technology behind crypto While virtually every cryptocurrency has some level of volatility, some stand out with particularly wild trading activity.

Speculation

Bitcoin is not only the frontrunner in the crypto arena but also one of its most volatile assets. Its lengthy trading history offers substantial data for constructing a reliable Bitcoin volatility index.

Most Volatile Cryptocurrencies

Bitcoin Volatility Time Series

Bitcoin

The above chart of Bitcoin's historical prices reveals its journey from under \$200 in 2013 to over \$13,000 by 2017. More recently, it fell to \$3,869 in March 2020 before reaching an all-time high of \$62,000 in 2021, underscoring Bitcoin's reputation as the most volatile cryptocurrency.

Since its 2016 value of \$10, Ethereum's price has seen significant ups and downs, reaching \$1450 in 2018, and even higher at \$1,943 in 2021. Ethereum's future appears promising based on its co-founder’s vision. sell your Bitcoins .

Ethereum

Ripple was introduced to offer a quicker and cost-effective solution for international transactions. Although it doesn’t lead in volatility, it frequently experiences dramatic price changes.

Which Cryptocurrency Has the Wildest Swings? altcoins that will survive .

Ripple

While Bitcoin is famed for its volatility, Stellar (XLM) shows extreme price changes. For instance, its annual volatility is around 1926%, making it a highly unpredictable digital currency.

Explore more about Stellar and other low-cost cryptos here

Presently, Bitcoin is still seen as highly promising. With supply dwindling alongside soaring demand, experts speculate its price may reach \$100,000 in the near term. Some promising altcoins !

Which Crypto Has Most Potential?

Uniswap has gathered momentum as DeFi gains popularity, with its token value skyrocketing in February 2021. Bitcoin halving In conclusion, Bitcoin remains the top volatile cryptocurrency, fueled by investor speculation. Volatility is integral to financial markets, paving the way for growth. Nevertheless, assessing risk is essential before investing heavily in cryptos.

That said, there are lots of Investors with a keen eye can capitalize on market swings and profit regardless of the market’s direction. Crypto volatility will persist as the market develops and the focus shifts from speculative to utility-driven investing. Join now for exclusive insights and offers!

Wrapping Up

What Are Market Orders and Their Uses?

As reported by CNBC, in April 2021, the crypto market exceeded a \$2 trillion valuation, signifying a major advance in financial standings. Yet, despite a rich history and growth path, volatility remains an issue for cryptos.