Bitcoin (BTC/USD) is the currency of the future, whose volatility is becoming a subject of increasing interest among investors and traders around the world. This BTC/USD Perspective Offers a Unique Analysis of Bitcoin Volatility.
Bitcoin, greatest cryptocurrency peace, famous for its high volatility. This makes it an attraction for traders, looking for more profit, but also a source of risk. BTC/USD Volatility, like any other cryptocurrency, can change significantly throughout the day. but, there are certain time frames, when this volatility usually increases.
Volatility analysis
Bitcoin Volatility has become a key factor, determining its attractiveness as an investment instrument. It reflects the degree of risk, associated with investments in bitcoin, and can be used to determine the optimal time to buy or sell.
Volatility is the fluctuations in the price of an asset over a certain period of time.. As volatility increases, so does the risk, but the potential profit is also higher. For bitcoin, this indicator has an important impact on its value and attractiveness for investors..
Volatility is a statistic, measuring the volatility of prices or returns of a financial instrument over time. In the context of cryptocurrencies, volatility often refers to sudden and significant changes in the price of a cryptocurrency in a short period of time.
ATR%(1) with 2018 of the year (on the hourly timeframe) shows, that during the opening of the Asian session and the American session, the volatility of Bitcoin reaches its maximum.
Why it matters? Such periods can be beneficial for active traders, looking for opportunities for transactions in a short period of time.
Higher volatility means, that the price of an asset can change significantly in a short period of time, what makes cryptocurrency potentially profitable.
Lower volatility, against, means, that the price of an asset changes more slowly and represents a less risky choice.
Bitcoin trading time: When and why volatility rises?
- Cross sessions: Moments, when trading sessions of different financial centers intersect, often associated with increased activity and volatility. For example, period, when are the European and American sessions open (with 12:00 to 16:00 GMT), could be a good time to trade, especially for short term strategies.
- After important news or events: If you know, that important news or event (for example, interest rate decision FED or the release of a report on the profitability of bitcoin) will be published soon, you can decide to trade around this time, to take advantage of potential volatility.
- 24/7 cryptomarket: Do not forget, that the crypto market, including bitcoin, works around the clock, seven days a week, what makes it different from traditional financial markets. It means, that you can trade at any time, which is convenient for you.
Increasing bitcoin volatility (BTC) can happen for a number of reasons:
- Regulatory news: Announcements of New Regulatory Measures from Governments and Financial Institutions around the World Could Cause Bitcoin Price Fluctuations. An example would be a ban on cryptocurrencies in a certain country or vice versa – their legalization.
- Technical updates and hard forks: Big technical changes in the bitcoin network, such as protocol updates or hard forks, can also cause an increase in volatility.
- Big transactions: Moving large amounts of bitcoin between wallets or exchanges can cause a temporary increase in volatility, especially if these transactions become known through transaction tracking services.
- Market Makers and Influencers: Actions of major players and market makers, that move significant amounts of bitcoin, can also cause changes in volatility.
- Psychology of market participants: Factors, like fear and greed, can lead to drastic price fluctuations, when traders and investors react to news, trends and other factors.
Factors, affecting the volatility of bitcoin
There are many factors, which affect bitcoin volatility. One is supply and demand in the market. When the demand for bitcoin rises, price goes up too, and vice versa.
Another important factor is the news background.. Bitcoin often reacts to political events, changes in economic policy and technological innovation. These events can cause significant fluctuations in the price of bitcoin., increasing its volatility.
How Bitcoin Volatility is Measured
Bitcoin Volatility usually measured with statistical tools, such as standard deviation or variance of returns. These tools allow traders and investors to assess risk, associated with investments in bitcoin, and make informed investment decisions.
Output
Bitcoin (BTC/USD) is a unique cryptocurrency, the volatility of which makes it an attractive tool for investors and traders. Understanding and using bitcoin volatility can help you make better investment decisions and manage risk.
